A high-yield savings account is a deposit account that usually lets you withdraw money whenever you need it. You can transfer funds to a linked checking account, request an ACH transfer, use an ATM if the account offers ATM access, or use another withdrawal method provided by the bank.
In 2020, the Federal Reserve removed the former six-withdrawal requirement for certain savings accounts. Banks can still set their own limits and fees. A high-yield savings account is generally more flexible than a certificate of deposit (CD), which may charge an early-withdrawal penalty if you take money out before maturity.
High-Yield Savings Account Withdrawals at a Glance
| Question | Answer |
|---|---|
| Can you withdraw money? | Yes, subject to the bank's account terms |
| Can you withdraw the entire balance? | Usually, although closing or minimum-balance rules may apply |
| Is there usually an early-withdrawal penalty? | No, unlike many CDs |
| Can the bank charge withdrawal fees? | Yes, if the account agreement allows them |
| Is there still a federal six-withdrawal limit? | No. Banks can set their own limits |
| Is the withdrawal taxable? | Usually no. Interest earned in the account may be taxable |
How Do You Withdraw Money From a High-Yield Savings Account?
Common withdrawal methods include:
- Transfer money to a linked checking account.
- Send an ACH transfer to an external bank account.
- Withdraw cash at an ATM if the account includes an ATM card.
- Request a bank check or cashier's check if the bank offers that service.
- Withdraw money at a branch, although many high-yield savings accounts are offered by online-only banks.
- Send a wire transfer, which may involve a fee.
The available methods depend on the bank. Online savings accounts often require you to link an external checking account before you can transfer money out.
Are There Limits on High-Yield Savings Account Withdrawals?
The Federal Reserve removed the former six-per-month limit for certain savings-account transfers and withdrawals in 2020. Banks and credit unions can still impose their own transaction limits, fees, minimum-balance rules and account restrictions.
Before withdrawing money, check the account agreement for:
- Monthly withdrawal or transfer limits
- Excess-transaction fees
- Minimum-balance requirements
- ATM fees and withdrawal limits
- Wire-transfer fees
- External transfer processing times
- Holds on newly deposited funds
A bank may also reserve the right to require advance notice for certain withdrawals, although this is rarely used for ordinary consumer accounts.
Can You Withdraw All the Money?
Usually, yes. You can generally transfer or withdraw the entire balance from a high-yield savings account. However, the bank may require you to close the account if the balance falls below its minimum requirement.
If you plan to close the account, confirm:
- Whether pending interest will be paid
- Whether scheduled transfers or direct deposits will fail
- Whether the bank charges an account-closing fee
- Whether you need to leave a small balance temporarily
- Whether the final transfer must go to a verified external account
Does Withdrawing Money Reduce Your Interest?
Yes. Withdrawing money lowers the balance used to calculate future interest. If you remove $3,000 from a $10,000 balance, you will generally earn interest on the remaining $7,000.
The account's advertised annual percentage yield (APY) usually does not change just because you make a withdrawal. You earn less interest because less money remains in the account.
Is a High-Yield Savings Withdrawal Taxable?
The withdrawal itself generally is not taxable because you are taking back your own deposited money. Interest earned in the account is generally taxable income. The Internal Revenue Service may report that interest on Form 1099-INT, and you generally must report taxable interest even if you leave it in the account.
Bottom Line
For a large withdrawal, review the account agreement first and allow time for external transfers to process. The bank's rules, rather than a federal six-withdrawal limit, determine most of the practical restrictions.
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