If you’ve never heard of a “high yield savings account” (AKA HYSA), by the end of this article, your mind will be blown. If you do know what a HYSA is and you don’t have one, after you read this article, your immediate next step is to go open one! Seriously. High yield savings accounts are one of the best ways to get the most bang for your savings buck.
Most standard banks and credit unions don’t offer high-yield savings accounts. Just go look at your current APY on your statement if you don’t believe me. That’s where online banks take the cake. Because online banks don’t have the same type of expenses as a brick and mortar bank, they can afford to give more to their customers in the form of interest.
If you have savings that you have no plans to touch, wouldn’t you rather earn 3% instead of .10%? Of course you would. Keep reading for 5 pros of leveraging a high-yield savings account.
5 Pros of Leveraging a High Yield Savings Account
#1 No fees or minimum balance requirements
One of the pros of high yield savings accounts is that there are no minimum balance requirements and no monthly maintenance fees! That means you can open a HYSA and keep $50 in there forever and never be charged for it. Obviously, you wouldn’t just keep $50 in there, but if you had to pause savings, you wouldn’t have to worry.
Because there are no minimum balance requirements and no fees, you can open as many accounts as you like! I always recommend 1 savings account per goal, so feel free to leverage HYSAs for all of your savings goals without having to pay a fee or keep a certain amount saved.
#2 Your savings is harder to get to
Be honest with me. With your current savings account being attached to your checking, do you constantly tap into it when you run out of money? Even though you should have kept your spending in check? This can be a dangerous game for over-spenders who are trying to save money. You don’t have that problem with an HYSA!
Because an HYSA is with an online bank, it means you can’t just walk into a branch and pull money. It also means that you can’t do an instant transfer into your checking. You have to wait a few days for the money to become available. This subconsciously forces you to think about how bad you truly need the money. If you’re only transferring to cover overspending, that’s usually not a good enough reason to initiate the transfer and wait! What a great way to keep your savings saved!
#3 Earn more just for having your money in this type of account
The only difference between your money sitting in a savings account at your bank and sitting in a high-yield savings account is that your HYSA is with an online bank. The functionality of the savings accounts are the same. The ability to transfer is the same. The amount of protection is the same. So why wouldn’t you keep your savings in an account that earns you 10x more in interest? Not saving in an HYSA is not a smart financial move…and there isn’t a good reason for it.
#4 You can set up automatic transfers or direct deposit
Just like regular savings accounts, you can set up automatic transfers and direct deposits into your high yield savings account! If your employer offers direct deposit, have your savings amount automatically sent to your HYSA. This makes your life that much easier! If you don’t have direct deposit, you can set up automatic transfers from checking to your HYSA. Set it and forget it!
Basically, it’s much easier to get money into your HYSA than it is to take out…and that’s a good thing! Leverage that to your advantage. Make sure you reference your budget, so you avoid saving too much money. Put just the right amount in there that you won’t miss but will help you reach your goals!
#5 Your money is just as safe with a HYSA as it is with a regular bank account
Now, if the thought of an online bank makes you feel like your money isn’t as safe, I’m here to tell you otherwise. Just like your regular savings account is federally insured up to $250,000, so is your HYSA with an online bank. Your money is just as safe. Sure, you may not be able to walk into a branch and get answers, but that has nothing to do with the safety of your funds. If safety is your concern, consider those concerns eliminated!
My HYSA Recommendations
Not sure where to start with your HYSA? Here are a few of my recommendations, and some of the accounts I personally leverage:
- Synchrony (I have this one. They typically raise rates quickly)
- American Express Bank (I also have this one. There is a lag on raised rates)
- SoFi
- Ally
- Discover
- Marcus Goldman Sachs
There are others. Just make sure you go with the best interest rate and any bank that is FDIC insured and you’ll be just fine!
Related: 5 Budget Adjustments to Save More Money
If the thought of not being able to walk into a branch bothers you, remember that a HYSA is just for savings. Your checking account can still be wherever you’d like. The goal is to earn as much interest as possible on the money you’re saving, and the best way to do that is with a high-yield savings account. Do you have a HYSA? What bank do you leverage? Share in the comments below!
-Raya
The CGS Team
