What is a High-Yield Savings Account?

Money meme of the week: Your ticket to a goodnights sleep

This week: What is a high-yield savings account?

HYSAs make your money work harder while keeping it safe. It will help grow your money faster than a traditional savings accounts.

What is it?

An HYSA pays 10-20x more interest than regular savings accounts.

Just as safe. FDIC insured up to $250,000.

Who needs one?

Anyone building an emergency fund, saving for a purchase, or working toward a major goal.

Key Terms:

• APY (Annual Percentage Yield) - The actual rate you earn after compounding. Compare this, not just interest rates.

• Compounding - You earn interest on your interest. Example: $1,000 at 4% APY becomes $1,040 after year one, then earns interest on the full $1,040 in year two.

• Minimum balance - Some banks require a certain balance to avoid fees.

Pros:

• FDIC insured

• Add funds anytime

• Money grows faster automatically

• Separates savings from spending money

Cons:

• Not for daily spending

• Rates can change anytime

• Some have minimum balances or fees

• Inflation might exceed your interest rate

How to choose?

• Confirm FDIC insurance

• Check fees and minimums

• Compare APYs (not just interest rates)

• Consider how you'll access your money

If you want a list of the best high-yield savings accounts, you can access the personal finance database here.

Talk soon,

Cam

PS: Check out this article by SuperAge talking about how to shift your money mindset.