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The Pros and Cons of High-Yield Savings Accounts: Is It Right for You?

Updated: Mar 6, 2023

Save all the monies
Save all the monies

Are you tired of earning minimal interest on your savings account? A high-yield savings account may be the solution you've been looking for. These accounts offer higher interest rates than traditional savings accounts, making them a great option for anyone looking to maximize their earnings.

But are high-yield savings accounts right for everyone? In this post, we'll explore the pros and cons of these accounts to help you decide if it's the right choice for you.

How Can They Do That

High-yield savings accounts offer a higher interest rate than traditional savings accounts because they are typically offered by online banks, which have lower overhead costs than brick-and-mortar banks. This allows them to pass the savings on to customers in the form of higher interest rates.

Pros of High-Yield Savings Accounts

  1. Higher interest rates: The main advantage of a high-yield savings account is the higher interest rate. While traditional savings accounts may only offer 0.01% or 0.05% interest, high-yield savings accounts can offer rates as high as 2.00% or even higher. This means you can earn more money on your savings over time.

  2. FDIC-insured: Just like traditional savings accounts, high-yield savings accounts are FDIC-insured, meaning your money is backed by the government up to $250,000. This provides an added layer of security and peace of mind.

  3. Easy to set up and use: High-yield savings accounts are easy to set up and use. Many banks and credit unions offer online application processes, so you can open an account from the comfort of your own home. Plus, you can easily access your account online or through a mobile app to check your balance, make deposits, and withdraw funds.

Cons of High-Yield Savings Accounts

  1. Minimum balance requirements: Some high-yield savings accounts may have minimum balance requirements, meaning you must keep a certain amount of money in the account to earn a high-interest rate. If you don't meet this requirement, you may earn a lower rate or no interest at all.

  2. Limited withdrawal options: High-yield savings accounts usually have limited withdrawal options. While you can usually make a certain number of withdrawals per month, going over this limit can result in fees or a lower interest rate. This may not be ideal for someone who needs access to their funds on a regular basis.

  3. Not available everywhere: While high-yield savings accounts are becoming more common, they may not be offered by every financial institution. This means you may have to shop around or switch banks to find one that offers a high-yield savings account.

Where to Set Up a High-Yield Savings Account

There are several options for setting up a high-yield savings account. Here are a few places to consider:

  1. Online banks: Online banks often offer some of the highest interest rates on high-yield savings accounts. Since they don't have the overhead costs of traditional banks, they can pass the savings on to their customers in the form of higher interest rates.

  2. Credit unions: Credit unions are non-profit financial institutions that are owned and controlled by their members. They often offer competitive interest rates on high-yield savings accounts and may have fewer fees than traditional banks.

  3. Traditional banks: Many traditional banks also offer high-yield savings accounts. It's worth shopping around to compare rates and fees at different banks to find the best option for you.

Best High Yield Savings Accounts

So, what are the best high-yield savings accounts currently available? Here are some of the top options:

Marcus by Goldman Sachs High Yield Savings

Marcus by Goldman Sachs is a popular option for those looking for a high-yield savings account. Additionally, their online platform makes it easy to manage your account and transfer funds. Their savings rate does vary vs the fed rate.

PNC High Yield Savings Account

PNC Bank is another option to consider. They require a minimum deposit of $1,000 to open an account, but there are no monthly fees to worry about.

Navy Federal High Yield Savings Account

If you are a member of the military or a family member of someone who is, Navy Federal Credit Union offers a high-yield savings account. There are no minimum balance requirements or fees, making it an attractive option for many.

SoFi High Yield Savings

SoFi is another popular online bank that offers high-yield savings accounts. There are no minimum balance requirements or fees, and their platform offers additional features such as financial planning tools and access to loans.

Earning Interest on Your Savings

So, how much can you actually earn with a high-yield savings account? The amount you earn will depend on a variety of factors, including the interest rate offered and how much you have deposited. Here are some examples of what you can expect to earn with different deposit amounts:

  • If you have $10,000 in a high-yield saving account with an APY of 0.50%, you can expect to earn around $50 in interest per year.

  • If you have $50,000 in a high-yield savings account with an APY of 0.40%, you can expect to earn around $200 in interest per year.

It's important to note that these are just estimates and the actual amount you earn may be slightly different based on the interest rate offered and any additional fees or requirements.

Are High Yield Savings Accounts Worth It?

While high-yield savings accounts can offer a higher return on your investment, they may not be worth it for everyone. If you need to access your money frequently or are unable to meet the minimum balance requirements, a high-yield savings account may not be the best option for you. Additionally, the interest rates offered on high-yield savings accounts can fluctuate, so it's important to keep an eye on your account to make sure you are still getting a good rate.

Are CD Accounts Worth It?

CD accounts, or certificates of deposit, are a type of savings account that requires a fixed amount of money to be deposited for a fixed period of time, usually ranging from a few months to several years. CD accounts typically offer higher interest rates than traditional savings accounts, but they also require a commitment to leave the money in the account for the specified term. Whether or not CD accounts are worth it depends on your individual financial goals and needs.

How Much Interest Will $50,000 Earn in a Savings Account?

Assuming an APY of 0.50%, a $50,000 savings account would earn approximately $250 in interest in one year. Again, it's important to keep in mind that interest rates can fluctuate and affect the total amount earned over time.

Where Can I Put My Money to Earn the Most Interest?

If you're looking to earn the most interest on your money, there are a few options to consider. High-yield savings accounts and CD accounts can offer competitive interest rates, but they may not be the best fit for everyone. Other investment options, such as stocks, mutual funds, or bonds, may offer higher returns but also carry higher risks. It's important to do your research and consider your individual financial goals and needs before deciding where to put your money.


High-yield savings accounts can be a great way to maximize your earnings on your savings. However, it's important to weigh the pros

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