High-Yield Savings Account

A high-yield savings account (HYSA) is an FDIC-insured savings account offering 400-500x more interest than traditional big bank savings accounts. As of 2025, top rates are 4-5% APY vs. 0.01% at major banks.

Why Online Banks Pay More: Online banks have no physical branches, so their operating costs are lower. They pass these savings to customers through higher interest rates. Your money is just as safe—same FDIC insurance ($250,000) as traditional banks.

Real Numbers:

• $10,000 at 0.01% APY: Earns $1/year
• $10,000 at 4.5% APY: Earns $450/year

That's $449 you're giving up by keeping money in a traditional savings account. Over 10 years, that's $4,490 in lost interest.

Features:

• FDIC insured (your money is safe)
• No monthly fees (typically)
• No minimum balance (usually)
• Mobile app and online access 24/7
• ACH transfers to/from your checking account (1-3 business days)

Limitations:

• No physical branches (everything is online)
• Limited to 6 withdrawals per month (federal rule, though relaxed post-COVID)
• Rates fluctuate with Federal Reserve policy

Best For:

• Emergency funds (3-6 months expenses)
• Short-term savings goals (under 5 years)
• Money you need liquid but not immediately
• House down payment savings

Popular Options: Ally Bank, Marcus by Goldman Sachs, American Express Personal Savings, Capital One 360, Discover Bank.