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The term “growth savings account” or “grow savings account” generally refers to a savings account that earns more than the average interest rate for a savings account. This allows your money to grow faster, just for sitting in the bank.

But are these accounts always a good bet? Important points to consider are:

•   What is a growth savings account?

•   How do growth savings accounts work?

•   The pros and cons of a growth savings account

•   How to open a growth savings account.

What Is a Growth Savings Account?

Growth savings accounts are similar to regular savings accounts, except that they tend to pay a higher annual percentage yield (APY), which represents how much an account holder will earn in interest over the course of a year.

More commonly referred to as a high-yield savings account, these accounts can pay 10 to 20 times more than the average APY for a savings account, while keeping those funds safe and accessible.

You may get the best interest rate on a growth savings account at an online bank or credit union versus a traditional, brick-and-mortar, bank. However, even at their best, the APYs on these savings accounts generally lag behind what you could earn by investing in the market over time. That makes growth savings accounts best suited for your emergency fund and money you’re saving for a short-term goal, like a vacation or large purchase.

How Do Growth Savings Accounts Work?

Growth savings accounts work in the same way as regular savings accounts. You open the account at a bank or credit union, deposit money into the account, and begin to earn interest on your balance. You can continue adding money to the account, either by making a deposit at a branch or ATM, transferring money from a linked account, or via mobile check deposit or direct deposit.

Savings accounts are typically insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) at banks and the National Credit Union Administration (NCUA) at credit unions. So you can’t lose your money (up to certain limits) even if the bank were to go out of business.

Savings accounts allow easy access to your money when you need it, though some institutions may limit the number of withdrawals or transfers you can make to six or nine per month.

Recommended: How High-Yield Savings Accounts Work

Pros of a Growth Savings Account

Here’s a look at some of the advantages that come with opening a growth or high-yield savings account.

Higher Interest Rates

Because these savings accounts can offer higher interest rates, the money held in the account tends to grow faster than money held in traditional savings accounts. When determining what is a good interest rate, it’s a good idea to also look into minimum balance requirements. You may see that you need to keep your balance above a certain threshold to earn the highest available rate.

Accessible Form of Growth

Putting money in a savings account can be a great way to earn interest while keeping that money liquid, meaning you can access it as soon as you need it. You don’t need to sell off investments or wait until a particular maturity date to withdraw the money.

Recommended: CDs vs Savings Accounts Compared

Good Way to Build an Emergency Fund

Because these funds are fairly accessible, a growth savings account can be a great place to build an emergency fund. That way, the emergency fund can continue to grow until it might be needed.

Cons of a Growth Savings Account

There are also some downsides to growth savings accounts worth keeping in mind before opening one.

Limited Growth Opportunity

Yes, growth savings accounts typically earn more interest than traditional savings accounts. However, when considering your long-term savings options, there may be more strategic investments that can enhance growth over time. If, for instance, you’re saving for retirement, which is a few decades away, you might take a look at the stock market for growth.

Withdrawal Limits

Growth savings accounts generally provide easier access to funds than keeping money in investments. That said, you may only be able to make a certain number of withdrawals or transfers per month (such as six or nine) or risk running into fees. While the Federal Reserve withdrew this rule during the pandemic, banks are allowed to continue imposing those limits, so it’s a good idea to check.

Earnings Are Taxable Income

The interest earned in a growth savings account can count as taxable income. By contrast, the money you put into a Roth Individual Retirement Account (IRA) grows tax-free.

Recommended: What is a Roth IRA and How Does it Work?

Choosing a Growth Savings Account

When you’re looking for ways to earn more interest on your money, a growth or high-yield savings account might be a good option. It’s a good idea to shop around to find the best fit for your needs. Here are a few factors to keep in mind when looking for a new savings account:

•   APYs

•   Minimum balance requirements

•   Fees

•   Account features

•   Mobile app

•   Other product and service offerings

How to Open a Growth Savings Account

While each banking institution will have its own process, opening a growth savings account typically includes the following steps:

•   Fill out the application. When filling out a savings account application, you’ll usually provide details like your name, Social Security number, proof of address (say, from a utility bill), and government-issued photo ID.

•   Choose the account type. There may be different savings account types, such as an individual account or a joint account (to share with a spouse or family member). Select the kind that’s right for your needs.

•   Designate beneficiaries. It’s important to choose a beneficiary for your growth savings account, just as you might select a beneficiary for a 401(k) plan. This is the person who would receive the account’s funds if you were to become incapacitated or pass away.

•   Deposit funds. Some banks require a minimum initial deposit, so you may need to make that deposit to open the account.

•   Create login information. To set up your online account, you’ll need to create login information such as a username and password. Be sure to create a unique and complex password with at least one capital letter, number, and symbol.

While there may be another step or two in some situations, that’s how to open a bank account.

The Takeaway

Growth savings accounts generally offer higher interest rates than traditional savings accounts, which can help your money grow faster. In some cases, however, these accounts may come with monthly fees and/or require you to maintain a certain minimum balance to earn the higher rate, so it pays to shop around.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do growth savings accounts work?

Growth savings accounts function similarly to traditional savings accounts. The only difference between these account types is that growth savings accounts tend to have higher interest rates.

What does “growth account” mean?

A growth account — also known as a high-yield account — typically offers a higher interest rate than a traditional savings account. This higher interest rate leads to more growth on deposited funds.

How much interest does a growth savings account earn?

These days, a growth or high-yield savings account can earn as much as 5% APY.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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Writing a call option refers to selling a call option contract to a buyer in exchange for a premium, or fee. The writer agrees to sell the option’s underlying stock at a fixed price (the strike price) if the buyer exercises the option within a set time frame.

There are two ways to write a call option — sell a covered call or sell a naked call.

•   Writing a covered call means selling an option on an underlying stock that you own.

•   Writing a naked call means selling an option on a stock you do not currently own.

The biggest difference between these two paths is the risk profile. Your risk with covered calls is that you may miss out on some of the upside gains if the stock’s price goes above the strike price of your call option.

When you sell a naked call, however, you have no risk protection and theoretically unlimited risk.

What Are Calls?

To understand writing call options, it can be helpful to consider the basics of call vs. put options: When you buy a call option at a specific strike price, you have the right (but not the obligation) to purchase the underlying stock at the strike price of the option over a given time period.

Buying a put gives you the right, but not the obligation, to sell the underlying stock at the strike price before expiration.

To learn how to trade options, it’s important to understand the differences between calls and puts, when to buy or sell options, and how to develop options strategies to minimize risk. When you buy an option, your maximum risk is capped at the amount of the premium, or fee, that you initially paid for the option. But when you write a call option or put option, your risk can be substantial or theoretically infinite.

Writing Call Options

Writing call options is similar to writing put options in that you initially sell the option for a premium. When you write a call option, you are creating a new option contract that allows the buyer the right to buy the stock at the specified strike price at any time on or before the expiration date.

When you write a call option, the option holder may exercise their right to buy the stock at the strike price at any time. In practice, early exercise is rare and typically occurs when the option is deep in-the-money, particularly if there is little time value remaining before expiration.

Recommended: Margin vs Options Trading: Similarities and Differences

Writing Call Option Strategies

There are different options trading strategies you could use when writing call options, depending on whether you have a bullish or bearish outlook for a given stock. Here are two of the most common call writing option strategies:

Writing Covered Calls

One common options strategy is writing covered calls. A call is considered a “covered” call when you also own at least 100 shares of the underlying stock. Writing covered calls is a popular income strategy if you think that the stock you hold will move within a specific range. You then might write a covered call with a strike price a little above the expected price range.

When you write covered calls, you will collect an initial premium since you are the seller of the option contract. Your best case scenario is that the underlying stock will close below the strike price of the call option at expiration. That means that the call will expire worthless, and you will keep the entire premium. If the stock closes above the strike price at expiration, you will be forced to sell your shares of stock at the strike price. This means that you may miss out on any additional gains for the stock.

Writing Naked Calls

Understanding what naked calls are is essential for options traders. A naked call is written when the seller does not own the underlying stock, creating the potential for unlimited losses. Unlike covered calls, writing naked calls comes with significant risk. Since a stock has no maximum price, you have unlimited exposure. The more a stock’s price rises above the strike price of the call option, the more money you will lose on the trade.

Due to the potential for unlimited losses, writing naked calls is considered a high-risk strategy and is typically used by traders with significant options experience or investors with a high risk tolerance. It’s important to understand these risks before writing naked calls, and you should also have a plan for what you will do if the stock moves unfavorably.

Writing Call Options Example

To understand the difference between writing covered calls and naked calls, here are two examples.

Covered Call Example

Say that an investor owns 100 shares of a stock with a cost basis of $65. Expecting the stock to trade between $60 to $70, the investor writes a covered call with a one-month expiration and a strike price of $70, collecting $1.25 in premium, or $125 ($1.25 x 100 shares).

If the stock closes below $70 at expiration, the investor retains their shares and the full $125 premium. Since the stock remains in their portfolio, another covered call could be written in the following month, which may generate additional premium income.

If the stock rises to $75 by the expiration date, the writer will be obligated to sell 100 shares of stock at the strike price of $70. Because the investor already owns 100 shares, they would be assigned. A broker facilitates the sale at $70/share, resulting in a $500 opportunity loss versus the $75 market price.

Naked Call Example

Assume that an investor has a bearish outlook on a stock that is currently trading at $100 a share. The investor decides to execute a naked call, meaning writing a call option for stock they don’t already own. They sell a call option with a $110 strike price for a premium of $4.25, collecting $425 upfront ($4.25 x 100 shares per the option contract). If the stock closes below $110/share at expiration, the contract expires worthless, allowing the investor to keep the entire $425 option premium.

If the stock price rises to $250 per share, for example, the seller would need to buy 100 shares for $25,000 and then sell them at a strike price of $110 per share to the buyer, incurring a $14,000 loss. This loss is offset slightly by the $425 premium initially collected.

The Takeaway

Writing call options may serve as an income-generating options trading strategy under certain market conditions. Writing covered calls on stocks already held in a portfolio may provide additional income, but limits profit potential if the stock price rises significantly.

A naked call involves writing calls on stocks the seller does not own. This strategy could result in substantial losses, depending on price movement, making risk management essential.

FAQ

Is writing a call option the same thing as buying a put?

Writing a call option and buying a put are different strategies with distinct risk profiles. An investor writing a call collects a premium but may be required to sell shares of the underlying asset at the strike price if assigned. A put gives the buyer the right to sell shares at a set price. Put buyers risk only the premium paid, whereas uncovered call writers face significant risk, as losses can increase indefinitely if the stock price continues to rise.

Does a writer of a call option make an unlimited profit?

No, a call option’s writer’s profit is capped at the premium collected. If the stock closes below the strike price at expiration, the option expires worthless, and the writer keeps the full premium. Unlike buyers, call writers do not benefit from stock price gains beyond the premium received.

How are call options written?

Writing a call option is another way to say that an investor is selling a call option. The call option seller receives a premium in exchange for giving the buyer the right (but not the obligation) to buy 100 shares of the stock at a predetermined strike price before expiration. If the option is exercised, the seller must deliver shares at the strike price, regardless of the market price at the time.

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