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Why a high-yield savings account is better than these 4 popular alternatives
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Issues with elevated inflation and interest rates have made it hard for many Americans to make ends meet. However, one perk of the current environment is the higher yields on high-yield savings accounts (HYSAs).
“Currently high-yield savings account rates are over 5% in some cases, while a standard savings account in a brick-and-mortar bank may be 0.1%,” says Jay Zigmont, Ph.D., certified financial planner, and founder of Childfree Wealth. And, high-yield savings accounts are a great place to keep your emergency savings and money for short-term goals, Zigmont says.
Plus, these accounts offer the security of deposit insurance. “Your money is secure in a high-yield savings account, as it’s insured by the FDIC up to $250,000 for individual accounts and $500,000 for joint accounts,” says Erik Croak, certified financial planner, accredited wealth management advisor, and president of Croak Capital.
But is a high-yield savings account the best choice for your situation?
Compare your top savings account options and start earning today.
Advantages of high-yield savings accounts over four popular alternatives
High-yield savings accounts offer a few unique advantages over other popular types of accounts, including:
- Traditional savings account: While traditional savings accounts currently have an average national interest rate of 0.47%, the best high-yield savings accounts have a return rate that’s about 10 times higher.
- Certificate of deposit (CD) account: Traditional CDs require you to make a deposit and leave it in the account for a specific term. If you need the money early, you have to pay an early withdrawal penalty. With high-yield savings accounts, you can add money over time and withdraw it without penalties. “Liquidity is valuable because it allows you to withdraw your cash if you’re in a pinch,” says Daniel Masuda Lehrman, certified financial planner at Masuda Lehrman Wealth.
- A money market account: You can find money market accounts with rates that compete with high-yield savings accounts, but they often come with additional requirements. For example, they may require a minimum deposit, minimum ongoing balance and/or payment of a monthly service fee.
- A high-yield checking account: High-yield checking accounts tend to offer much lower annual percentage yields (APYs) than high-yield savings accounts. Higher-APY offerings do exist but they’re harder to find and may come with a variety of requirements. Checking accounts also allow for easier access to your money which may not be ideal for those looking to save.
Learn more about how the best high-yield savings accounts can benefit you now.
Other considerations
While high-yield savings accounts have many perks, there are also a few potential drawbacks to consider.
For one, some financial institutions limit the number of withdrawals you can make from your high-yield savings account per month. The Federal Reserve removed the numeric limits on convenient transfers or withdrawals from “savings deposit” accounts in 2020, but some institutions still have them in place. Ally, for example, allows 10 withdrawals or transfers from a savings account per cycle. If you exceed the limit, the bank may close your account.
Next, the best high-yield savings account rates often come from online banks, credit unions and smaller banks. If your high-yield savings account ends up at a different bank than your checking account, transfers may take several business days to complete.
Further, you can’t lock in a rate with a high-yield savings account like you can with a CD. Your rate is variable so it will fluctuate with the market. While that can be helpful when rates go up, it will reduce your earnings when rates go down.
“The Fed is shouting from the rooftops that interest rates will fall in the near future. For that reason, right now CDs are an attractive choice instead of, or in addition to, a high savings account,” says Lisa Whitley, accredited financial counselor and chartered retirement planning counselor at Money by Lisa.
Is a high-yield savings account right for you?
A high-yield savings account can be a helpful place to house your short-term savings — especially when rates are higher than usual.
“I always love a high-yield savings account for money that you anticipate spending in the next couple of years, or for funds with which you simply can’t take any risk. For example, your home down payment fund,” says Whitley.
It’s also a good account for retirees who are drawing down their retirement funds, according to Whitley.
“Keep one or two years of living expenses to mitigate against the ‘sequence of return’ risk. That is, the risk that you would have to sell your stock holdings just at the time a ‘black swan’ event hits the market and prices have sunk,” Whitley says.
But high-yield savings accounts aren’t to be confused with wealth-building accounts, Whitley says.
“Let’s be clear: the point of your cash savings is not to earn a lot of money. It’s a buffer against bad times and a safe place to accumulate funds for a future must-have expense.”
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Authorities in New Mexico say they discovered at least 10 human skulls in and around a property near the southeastern border, which could include the remains of a woman who’s been missing since 2019.
Investigators found the remains while executing a search warrant for Cecil Villanueva, a man flagged to law enforcement by a local resident in the city of Jal. The resident said he offered Villanueva a ride in his car and proceeded to have “an unsettling encounter” with him, the Lea County Sheriff’s Office said.
The resident, who authorities haven’t named, reported the interaction on Nov. 5. He said Villanueva was carrying two bags and “made alarming statements” as he “discarded objects from the vehicle, some of which appeared to be human bones,” the sheriff’s office said. Investigators uncovered bone fragments during their subsequent search of the area, and a pathologist later confirmed they were in fact human bones. Forensic experts went on to determine the findings included portions of a human skull and jawbone, according to the sheriff.
There is evidence of the remains of between 10 and 20 human skulls on a property in Jal where Villanueva had been staying, which was “associated with rumors of human remains,” the sheriff said. A team of investigators and a forensic anthropologist turned over the remains to the Office of the Medical Investigator in Albuquerque. The medical investigator will analyze and potentially identify them.
🚨PRESS RELEASE🚨
Human Remains Discovered in Ongoing Missing Persons Investigation in Jal, NM
November 12, 2024 – The…
Posted by Lea County Sheriff’s Office on Tuesday, November 12, 2024
Law enforcement has so far released few details about the case, but they said it “is being closely tied” to the disappearance of a woman named Angela McManes, who went missing in 2019 and lived near the property now under investigation.
“Authorities are working diligently to determine the connection between the remains and McManes, as well as other possible victims,” the sheriff’s office said.
Authorities have not said whether Villanueva has been arrested in this case. The man apparently claims he purchased the skulls online, CBS News affiliate KOSA reported Tuesday. At the time, Lea County Undersheriff Michael Walker told the station authorities were still working to determine whether the skulls they found were real human skulls.
Anyone with information related to the investigation has been asked to contact the Lea County Sheriff’s Office or the county’s local Crime Stoppers line. CBS News reached out to the sheriff’s office for more information but did not immediately hear back.
Lindsey Vonn is coming out of retirement to rejoin the U.S. Ski Team, she announced Thursday, intending to race again at age 40 — and six years after her last Olympics.
Vonn is a three-time Olympic medalist, including a downhill gold and super-G bronze at the 2010 Vancouver Games, and a bronze in the downhill at the 2018 Pyeongchang Games. She is also a four-time overall World Cup champion and owns eight world championships medals.
Her 82 World Cup race victories stood as the record for a woman until that total was eclipsed in January 2023 by American Mikaela Shiffrin, who is still active and is now up to 97 wins — more than any Alpine ski racer in the history of the sport.
Before eclipsing Vonn’s total, Shiffrin said: “I don’t know if I could fill Lindsey’s shoes, the way that she has worn them.”
Gero Breloer / AP
Vonn’s last competition came in February 2019, after she dealt with a long series of injuries throughout her career, including a spectacular crash in at the Pyeongchang Games that left her with torn ligaments and a fractured tibia. In 2017, she detailed her injuries in a “60 Minutes” interview: Two ACL tears, an MCL tear, an injury to her meniscus, several broken bones, including her wrist and multiple fingers. Just this April, years after leaving the World Cup circuit, she had surgery for a partial knee replacement.
Vonn has been training in recent months, U.S. Ski & Snowboard said Thursday.
“Getting back to skiing without pain has been an incredible journey,” Vonn said, adding that she wants to “continue to share my knowledge of the sport with these incredible women” on the American team.
U.S. Ski & Snowboard president and CEO Sophie Goldschmidt said Vonn’s “dedication and passion towards Alpine skiing is inspiring, and we’re excited to have her back on snow and see where she can go from here.”
Vonn is back with the team effective immediately, but it is not yet known which particular races she will be aiming to enter.
The next Winter Olympics are in Italy in February 2026.
