High-Yield Savings Account (HYSA)

A high-yield savings account, or HYSA, is an ordinary savings account that simply pays a far better rate. They are usually offered by online banks, which have lower overhead than branch banks and pass the savings on as a higher APY. Like any bank savings account, balances are insured by the FDIC up to the legal limit, so the money is safe, and it stays liquid, meaning you can withdraw it without penalty.

The combination of safety, liquidity, and a competitive yield makes a HYSA the standard recommendation for cash you cannot afford to put at risk, especially an emergency fund. It is not an investment and will not outpace inflation by much, so it is the wrong place for long-term retirement money, but it is the right place for the cushion you might need next month. Our emergency fund playbook explains how much to keep in one, and the high-yield savings calculator shows how the balance grows over time.