Category: Savings & Investing

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Index funds and ETFs are the two most popular ways to invest for beginners. They are very similar. But they have a few key differences. This guide breaks down both in plain language.

What Is an Index Fund?

An index fund is a type of mutual fund that tracks a market index. The most common is the S&P 500. The S&P 500 is a list of the 500 biggest U.S. companies. An index fund that tracks it buys all 500 stocks in the same proportions. You get instant diversification.

Index funds are bought and sold at end-of-day prices. You place an order, and it fills at the closing price. You can only buy full shares, not fractional shares (with some exceptions).

What Is an ETF?

An ETF (exchange-traded fund) is similar to an index fund, but it trades on a stock exchange like a regular stock. You can buy and sell it at any time during the trading day, just like Apple or Amazon stock. You can buy fractional shares at many brokerages.

Most ETFs track an index too. The most popular is VOO (Vanguard S&P 500 ETF). It tracks the same 500 companies as an S&P 500 index fund.

Index Funds vs ETFs: Side-by-Side

Feature	Index Fund	ETF
Trades Like	Mutual fund (end of day)	Stock (anytime during market hours)
Minimum Investment	$0–$3,000 (varies)	Price of one share (or $1 with fractional)
Expense Ratios	Low (some 0%)	Low (often 0.03%–0.20%)
Tax Efficiency	Good	Usually better
Fractional Shares	Usually yes	Depends on broker
Auto-Invest	Easy to set up	Less common
Where to Buy	Mutual fund company	Any brokerage

Expense Ratios: The Hidden Cost

Both index funds and ETFs charge an expense ratio. This is an annual fee expressed as a percentage of your balance. A 0.03% expense ratio on $10,000 costs $3 per year. Always choose the lowest expense ratio you can find.

Fidelity offers zero-expense-ratio index funds like FZROX. Vanguard and Schwab offer funds and ETFs with expense ratios near zero.

Tax Efficiency

ETFs are generally more tax-efficient than index funds. This is because of how they handle investor redemptions. ETFs rarely trigger capital gains taxes within the fund itself. This matters more in taxable accounts. If you invest in a Roth IRA, tax efficiency inside the fund matters less.

Which Brokerages Offer the Best Index Funds and ETFs?

• Fidelity: Best for zero-fee index funds (FZROX, FZILX). Great for hands-off investors.
• Vanguard: Best for ETFs (VTI, VOO). Invented the index fund concept.
• Schwab: Great for both. Low-cost ETFs and solid index funds.

Which Should You Choose?

For most beginners, the answer is: it does not matter much. Pick either one at a low-cost brokerage and invest consistently. The most important factor is to start early and keep investing.

• If you want to auto-invest a fixed dollar amount every month, an index fund is easier.
• If you want more flexibility to trade during the day, an ETF is better.
• If you have less than $1,000 to start, an ETF with fractional shares may work better.

For more on how to get started, see our guide on how to start investing with $100. If retirement is your goal, learn how to open a Roth IRA and compare Roth vs Traditional IRA.

Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

A high-yield savings account (HYSA) pays you much more than a regular savings account. Right now, top rates are around 4.50% to 5.00% APY. The national average is only about 0.46% APY. That gap adds up fast.

In this guide, we cover the best high-yield savings accounts of 2026. We compare rates, minimums, and what makes each one stand out.

Best High-Yield Savings Accounts of 2026

1. Marcus by Goldman Sachs — 4.50% APY

Marcus has one of the most consistent rates in the market. There is no minimum deposit. There are no monthly fees. It is a simple, clean online savings account. Customer service is good. The app is easy to use.

2. SoFi High-Yield Savings — up to 4.60% APY

SoFi pays the highest rate when you set up direct deposit. Without it, the rate drops. Still, if you get paid through SoFi, this is a top pick. SoFi also offers checking, investing, and loans all in one app.

3. Ally Bank — 4.35% APY

Ally is one of the oldest and most trusted online banks. There is no minimum balance. No monthly fees. Ally also offers CDs, checking, and money market accounts. Great for people who want all their banking in one place.

4. Discover Online Savings — 4.25% APY

Discover pays a solid rate with zero fees. No minimum to open. Discover is also known for great customer service. If you already have a Discover credit card, linking accounts is seamless.

5. CIT Bank Platinum Savings — 4.70% APY

CIT Bank pays the highest rate on this list, but only if you keep $5,000 or more in the account. Below that balance, the rate drops to 0.25%. This account is best for people with larger balances.

6. UFB Direct — 4.55% APY

UFB Direct has no minimum balance and no monthly fee. It often beats Ally and Marcus on rate. The app is decent. UFB is a division of Axos Bank, which is FDIC insured.

Quick Rate Comparison

Bank	APY	Minimum Balance	Monthly Fee
CIT Bank Platinum	4.70%	$5,000	None
SoFi (with direct deposit)	4.60%	None	None
UFB Direct	4.55%	None	None
Marcus	4.50%	None	None
Ally Bank	4.35%	None	None
Discover	4.25%	None	None

Rates as of May 2026. Rates change frequently. Check with each institution for current APY before opening an account.

What Is FDIC Insurance?

All of the banks above are FDIC insured. That means your money is protected up to $250,000 per person, per bank. If the bank fails, the government gives you your money back. You do not need to do anything special to get this protection.

How to Choose the Right HYSA

Here is a simple way to pick:

• If you have less than $5,000 — go with Marcus, Ally, or UFB Direct. No minimums. Great rates.
• If you have $5,000 or more — CIT Bank Platinum pays the most.
• If you want everything in one app — SoFi or Ally.
• If you value customer service — Discover or Ally.

Is a High-Yield Savings Account Right for You?

A HYSA is perfect for your emergency fund. Most experts say you should have 3 to 6 months of expenses saved. A HYSA keeps that money safe and earning interest. Use our emergency fund calculator to find your target amount.

If you want even higher rates and do not need access to your money for a while, look at money market accounts or CDs. If you are new to high-yield savings, check out our guide on the best HYSA for beginners.

Use the AskMyFinance tool above to get a personalized recommendation based on your balance and goals.

Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

Savings account interest rates move fast. The Federal Reserve has raised rates several times since 2022. That is good news for savers. Online banks now pay far more than big banks like Chase or Bank of America.

This guide explains how savings rates work and shows you where to find the best rates today.

Best Savings Account Rates Right Now (May 2026)

Bank	APY	Account Type	Minimum
CIT Bank Platinum Savings	4.70%	High-Yield Savings	$5,000
UFB Direct	4.55%	High-Yield Savings	None
SoFi (with direct deposit)	4.60%	High-Yield Savings	None
Marcus by Goldman Sachs	4.50%	High-Yield Savings	None
Ally Bank	4.35%	High-Yield Savings	None
Discover	4.25%	Online Savings	None
National Average	0.46%	Regular Savings	Varies

Rates as of May 2026. Rates change frequently. Check with each institution for current APY before opening an account.

National Average vs High-Yield Rates

The national average savings rate is 0.46% APY. That means if you have $10,000 in a regular savings account, you earn about $46 a year. Put that same $10,000 in a HYSA at 4.50% APY, and you earn $450. That is 10 times more money for zero extra work.

Why Do Online Banks Pay More?

Online banks do not have physical branches. They spend less money on buildings and staff. They pass those savings to customers in the form of higher interest rates. Big banks like Chase or Wells Fargo have thousands of branches to pay for, so they cannot afford to pay high savings rates.

How the Fed Affects Savings Rates

The Federal Reserve sets the federal funds rate. When the Fed raises rates, banks can charge more for loans. They also pay more on deposits. When the Fed cuts rates, savings yields tend to drop.

The Fed hiked rates aggressively in 2022 and 2023. Rates stayed high through 2024. In 2026, rates remain elevated, which is great for savers. But they may come down. Locking in a CD now could be a smart move. Read more in our guide to best high-yield savings accounts.

Online Banks vs Brick-and-Mortar Banks

Feature	Online Banks	Traditional Banks
APY	4.25%–4.70%	0.01%–0.10%
Monthly Fees	Usually none	Often $5–$15/month
ATM Access	Limited or reimburse fees	In-network ATMs
Physical Branch	No	Yes
Mobile App	Excellent	Good to excellent

How to Switch to a High-Yield Savings Account

It takes about 10 minutes to open an online savings account. You will need your Social Security number, a government ID, and your current bank account info. After you open the account, transfer your savings over. You can keep your old account open if you want. Many people keep a small amount at their local bank for ATM access.

Not sure which account is right for you? Use the AskMyFinance tool above. Or read our full comparison of savings account interest rates. You can also explore money market accounts if you want check-writing privileges with your savings.

Disclosure: This article contains affiliate links. We may earn a commission if you apply through our links, at no extra cost to you.

Ally Bank and Marcus by Goldman Sachs are two of the most popular online savings accounts. Both have no monthly fees. Both have no minimum deposit. Both are FDIC insured. So which one should you choose?

This side-by-side comparison covers APY, mobile app, CD options, ATM access, and customer service.

Quick Comparison

Feature	Ally Bank	Marcus by Goldman Sachs
Savings APY	4.35%	4.50%
Minimum Balance	None	None
Monthly Fee	None	None
CD Options	Yes (many terms)	Yes (many terms)
Checking Account	Yes	No
ATM Access	Yes (Allpoint network + reimbursements)	No (savings only)
Mobile App Rating	4.7/5 (iOS)	4.8/5 (iOS)
Customer Service	24/7 phone, chat, email	24/7 phone
FDIC Insured	Yes	Yes

Rates as of May 2026. Rates change frequently. Check with each institution for current APY before opening an account.

Savings APY: Marcus Wins

Marcus pays 4.50% APY. Ally pays 4.35%. On a $10,000 balance, that difference is $15 per year. It is not huge. But Marcus has consistently matched or beaten Ally on rates for the past few years.

ATM and Checking: Ally Wins

Ally has a full checking account with a debit card. You can use over 43,000 Allpoint ATMs for free. Ally also reimburses up to $10 per month in out-of-network ATM fees. Marcus is savings-only. No debit card. No ATM access. If you want easy access to cash, Ally is better.

CD Options: Tie

Both banks offer competitive CD rates. Ally has a wider range of CD types, including a No-Penalty CD that lets you withdraw early without a fee. Marcus offers straightforward CDs with clear terms. Both are good options for locking in today’s rates.

Mobile App: Near Tie, Marcus Edges Out

Both apps are excellent. Marcus scores slightly higher on the App Store, but Ally has more features since it includes checking. Day-to-day, both are smooth and easy to use.

Customer Service: Ally Wins

Ally offers 24/7 phone support plus live chat and email. Marcus offers 24/7 phone support only. Both have good reputations, but Ally gives you more options to reach a human.

Which Should You Choose?

Choose Marcus if you want the highest savings rate and a clean, simple experience. It is great if you already have a checking account somewhere else.

Choose Ally if you want a full banking relationship — checking, savings, and CDs — in one place. Ally is also better if you need ATM access.

Want to compare more options? See our guide to the best high-yield savings accounts. You might also consider a money market account, which combines savings rates with check-writing ability. For emergency fund planning, use our emergency fund calculator.