Why I Think We All Need a High-Yield Savings Account (HYSA)
Published on June 17, 2022
Updated on August 29, 2025
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This type of savings account has the highest interest rate
High-yield savings accounts have a higher interest rate than your regular savings account… yes, you read that right.
I always thought having my money in a regular savings account was the best place for my emergency fund or savings for my short-term goals, but I am learning that it is not…
One day, I went to breakfast with two friends and we got to talking about finances.
I love that I can have these conversations with friends because I learn so much from them and it’s nice to compare money managing techniques. I always leave feeling like I have learned a little somethin’.
Anyways, one of my friends shared that she had just opened her first high-yield savings account (HYSA) and the interest rate was around .5. My other friend and I were like whaaaat is this amazing account you speak of?!
We could not believe our ears that HYSAs have higher interest rates than regular savings accounts.
What is a high-yield savings account (HYSA)?
“A high-yield savings account is a type of savings account that typically pays 20 to 25 times the national average of a standard savings account.”
–National Rates & Rate Caps, as cited by Sabrina Karl at Investopedia, see article here
Most people have the regular savings account they opened when they first opened their checking account – I know that’s how I got my first one.
Since HYSAs have a higher interest rate than your regular savings account, that means more money in your pocket at the end of each month!
Many banks that offer HYSAs are online banks, but not all.
When you open a savings account, your bank pays YOU interest on the funds you have in the account because the more money they have in their reserves, the more money they can loan out to other people.
And online banks are able to pay a higher interest rate for the HYSAs because they have fewer overhead costs (more on that later).
So, paying you interest is their way of incentivizing you to use your savings account.
You can earn more money by having a HYSA
Having any type of savings account is a way to make a small amount of passive income, but having a HYSA will increase the amount you receive.
I am going to share an example comparing a regular savings account vs. a high-yield savings account with different annual percentage yields (APY) rates (fancy name for interest rate).
To read more about APY, click here.
Regular savings account: $2,000 x 0.03% APY = $.06 paid to you
vs.
High-yield savings account: $2,000 x .50% APY = $10 paid to you
I know that $10 may not sound like a lot… but more money is better than less in my eyes. Don’t cha think?
That would be $9.94 you would be missing out on if you just had a regular savings account.
This is why you need a high-yield savings account!
Choosing a HYSA
Bank Rate is a good place to start if you are wanting to compare interest rates. They update this page often.
Currently, I am utilizing 2 different banks’ HYSAs.
The first is with a local credit union, Oregon Community Credit union.
Here are screenshots of the APY from my regular savings account vs my Oregon Community Credit Union HYSA
Vs.
My second account is with Ally.
They are known for their “buckets” (aka financial envelopes) with cute icons where you can have a “bucket” for each thing/event/etc. you’re saving for all within one account.
Ally’s current rate as of June 2022 is 1%!!
I just opened this one recently, but here’s a glimpse of my account and the buckets below!
With many of the banks that offer HYSAs being online banks, this means there is no physical location you can visit. I didn’t mind that when I opened my accounts, but that is important to some people.
Since they do not have a physical location and have fewer employees, they are able to pay higher interest rates on the accounts they offer.
Another factor to consider is if the bank is a member of the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) to protect you if the bank ever fails.
Other things to consider:
- Minimum deposit requirements
- Minimum balance reuirements
- Fees
- A transfer plan for when you need the money (it could take a few days for the money to hit your checking account if you have it at another bank)
Final Thoughts
If you have money in a savings account or want to start saving, definitely consider opening a HYSA so you can ensure you are getting a decent interest rate!
Great advice I was told was to not spend too much time reading which bank to open your HYSA with. Spend a little bit of time reading, pick one and go!
Sometimes it can be difficult to make a decision when there are so many options to choose from.
Regardless of the one you open, it will likely have a higher interest rate than your regular savings account and that’s the goal!
I’d encourage you to go look at the interest rate for your current savings account and compare the rate to one of the HYSAs I mentioned above or one you already have in mind.
Do you have an HYSA or are considering opening one? Let me know your thoughts about them in the comments below!
