What is a High Yield Savings Account (HYSA)?

emergency funds savings

What if I told you there was a way to make ten times the interest you’re currently making on your savings?  

Would you be interested? Intrigued? Excited?

Well, there is!  And it’s called a High-yield Savings Account (HYSA).

In my humble opinion, your number one financial goal should be to have at least three to six months of expenses in an emergency fund.  

The best place to keep that money is in a high-yield savings account so you get as much interest on that money as possible!  

Read on!


What is a High-Yield Savings Account?

A high-yield savings account, often referred to as an HYSA, is regular savings account that can pay as much as twenty times the interest rate than the average savings account. 

High-yield savings accounts tend to be available from online banks, which means most do not have branches you can walk into.

With that said, most of these types of financial institutions have wonderful online banking experiences.  Their websites and apps are easy to navigate and there’s usually an easy to use chat feature if you have any questions.

Additionally, they have very low fees - sometimes no fees! - to bank with them.  Even to transfer money to and from your regular account!


Pros and Cons of High-Yield Savings Accounts

While I am a huge high-yield savings account super fan there are Pros and Cons to consider before you open an account.  

There are far more Pros than Cons, in my opinion, but you should consider each carefully so you make the best decision for you and your situation.

The Pros of High-Yield Savings Accounts

  • Higher than average interest rates, which means more money in your pocket
  • Very low, if any, fees to move your money into and out of the account as needed
  • You don’t need thousands of dollars to open an account.  Most have NO minimum deposit requirements
  • Easy online user-interaction experience and many financial management tools, too
  • Accounts are FDIC insured up to $250,000
  • BONUS PRO: If you’re trying to build a savings habit, having the money directly deposited into this account could be just the right amount of friction needed to talk yourself out of moving it back to your checking account.  #parentingyourself!


The Cons of HIgh-yield Savings Accounts

While there aren’t many, these Cons should be considered before opening an account:

  • The Biggest CON: HYSA interest rates fluctuate based on the Prime rate.  Rates are high right now, but when they go back down, you won’t make as much interest per month 
  • When transferring money, it can take two to three business days for the funds to clear.  Something to think about if you need to access the money quickly
  • There is a limit on the number of transfers in/out allowed per month
  • Most HYSA accounts do not have checks or debit cards.  You may only move the money electronically
  • Likewise, most institutions that offer HYSAs don’t have physical branches you can visit, so you need to feel comfortable banking electronically


Best High-Yield Savings Accounts

I do have a few favorites for different reasons.  I’ll update this list periodically, so do be sure to bookmark this blog and come back!

  • Best Overall HYSA: Marcus by Goldman Sachs.  This is the account I have used for the last couple of years.  They keep their rate competitive and alert you everytime they increase OR decrease the amount.  Love them!
  • Best HYSA Runner Up: SoFi!  They have only recently entered the HYSA arena, but their rates  are very competitive.  Additionally, they already had a fantastically easy to use website/app, so double win
  • Best HYSA for COUPLES: Again Marcus by Goldman Sachs.  I think SoFi, and even Affirm to an extent, are awesome but they only allow individual accounts, not joint accounts.  This is problematic for couples with shared finances
  • Best Checking/Savings Combo:  Ally Bank.  While not technically an HYSA since it’s a checking/savings account combo, Ally Bank has been around for years and has a great reputation


For an up-to-date list of current HYSAs and their rates, check out this NerdWallet article:  8 Best High-Yield Savings Accounts


Conclusion: Are High-Yield Savings Accounts Worth It?

In my humble opinion: Absolutely YES!  

High-yield savings accounts offer you the opportunity to earn the most interest possible on your savings.  Sometimes as much as twenty times the national average!  Plus, most have no minimum deposit requirements.  Which means you can go online and open one today with as little as fifty bucks! 

You can also use them to help yourself achieve a savings goal.  Have your employer directly deposit money into the account.  This completely bypasses your checking account and eliminates the chance you’ll spend the money before you can transfer it yourself.  

Additionally, these accounts are covered by FDIC insurance, keeping your savings safe and sound until you need it.  #winwin!

If You Liked This Blog, You Might Like One of These:

Are You Leaving Money on the Table?

How to Start Saving - Even if You’ve NEVER Been a Saver!

What is an Emergency Fund

**I am not a licensed financial advisor.  I am a money expert and I offer education, tips, tricks, and my opinions on money.  You should consult a professional who understands your needs in order to make the best decisions for you!  Additionally, some links in this blog may be affiliate links, which means if you click the link and buy the product I may earn a small commission - at NO COST to You! It’s one of the ways I keep the lights on around here so TYIA! 😉


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