The Easy New Year Financial Goal: Open a High-Yield Savings Account

Earn money by opening a high-yield savings account so you can spend the day lounging under one of these beautiful umbrellas rather than worrying about your money.

If there is one financial account I feel like I talk about endlessly, it is the high-yield savings account (HYSA).  Despite me feeling like I talk about HYSAs endlessly, someone reaches out to Patrick or me at least a few times a year asking if they should open a HYSA.  Yes!  Every adult should have one.  If you do not have one, go open one right now!

HYSAs are the best accounts for earning money without absorbing any risk or worrying that you cannot access your money.  They are called high-yield savings accounts because while they are savings accounts and thus are not invested in the market, they accrue interest at a generous level that allows your money to grow.  Right now, most HYSAs have interest rates between 3% and 4%.  If you put $100 into a HYSA, you will have over $103 a year from now just by letting your money sit there.  You earn $3-$4 by doing nothing.  If $3 does not seem worth it, notice that is the interest earned on every $100.  If you have $5,000 in a HYSA, you earn $150 to $200 by doing nothing.  A $50,000 savings account balance returns $1,500 to $2,000.  That is a free vacation for letting your money sit in a HYSA instead of a checking account or cash app.

Here are some quick facts about why you should have one:

• There is no cost to open a HYSA.

• There is no risk in putting your money in a HYSA with FDIC or NCUA coverage.

• You can access money in a HYSA whenever you want.

• Your money will earn money while you do nothing.

If that sounds too good to be true, then let’s dive into how HYSAs work.

No Cost

There is typically no transaction fee to get started with a HYSA.  You just open an account, contribute some money, and let it sit and grow.

If you look into opening a HYSA at the bank where you currently have a checking account, this may appear false.  Common checking account banks like Bank of America, Wells Fargo, and Chase offer savings accounts with monthly maintenance fees and poor rates of return.  Some even have large minimum opening deposit requirements, meaning you cannot open a savings account there without contributing a certain amount of money.

If the bank where you have a checking account does not offer a HYSA or offers a savings account with poor rates, go elsewhere!  There is no reason to limit your banking to a single platform, so investigate the current rates from different banks offering HYSAs, and pick one.  (When comparing rates, be sure that you consider the ongoing interest rate and not just a limited-time promotional offer.)

Make sure to pick a HYSA with no minimum opening deposit, especially if you want to start contributing a small amount of money each month.  Additionally, make sure there are no maintenance fees.  HYSAs should be all growth and no fees for the saver!

I also recommend choosing a HYSA option where you can have either different savings buckets within your HYSA or multiple HYSAs.  This allows you to save for different financial goals.  You can make sure you have an emergency fund, save for the downpayment on a home, and contribute to a vacation fund in one place with three different buckets for each financial goal.  The great thing about buckets is you can organize them however you want.  I have a bunch of different buckets in my HYSA.  I even have two different travel funds, one called “Travel” for normal travel getaways and one called “Extravagance” to fund our large annual trip, like our month in Sicily last summer.  Having those separate accounts lets me know it is okay to splurge more than we normally would on our extravagant trip because it has a larger allocation of money than a quick week in the Caribbean.

The final factor to consider is how many transactions the account allows per month.  Most HYSAs offer unlimited contributions because they are happy for you to add more money to their bank.  However, most have a monthly limit on withdrawals from a particular account.  My HYSA limits this to ten withdrawals per month, which is never a problem.  I pay myself back for any transactions in a current category once a month.  If you would rather pay yourself back as you go, then it may be more important to you to have a larger number of withdrawals permitted each month.

Regardless of which HYSA you choose, the most important idea is to open one as soon as possible!  Missing out on a month of interest is a bigger deal than getting a 0.1% lower interest rate than you could have received with another HYSA.  After verifying that you are not paying any maintenance or transaction fees, open the account as soon as possible to let your money earn money.

Risk and Accessibility

When we invest our money in an index fund, we know the market will go down at some point during our investing journey.  We are planning for the long-term and betting that the most successful businesses will earn money over decades, so we can enjoy their growth 10, 20, or 30+ years from now.  If we are investing in that index fund through a retirement account, like a 401(k) or IRA, we also acknowledge that we cannot easily access some of that money until we reach retirement age, unless we are willing to incur a penalty.  We accept risk for higher rates of growth and inaccessibility.

There are many different financial accounts built to accommodate varying degrees of risk tolerance and inaccessibility tolerance.  For example, certificates of deposit (CDs) offer a higher rate of return than a HYSA but lock up your money for an agreed-upon term, making your money inaccessible for the duration of that term.  CDs do not incur the risks of an index fund–you will earn money in a CD–but their rates of return are lower than an index fund, and you cannot access your money whenever you want.

Alternatively, you can keep all your money in a checking account and know you can access it whenever you want without limitation.  But checking accounts earn no interest (or only a negligible amount of interest at best), meaning you actually lose money by letting it sit there as inflation makes purchases more expensive.  Losing money without spending is the worst deal of all, especially since you probably worked hard to earn that money.

Enter the HYSA!  HYSAs are the magical account that earns money slowly so your money keeps up with inflation, and sometimes grows a bit more than inflation.  Unlike an index fund, your money will only grow.  It even grows at a predictable rate, communicated to you by the bank housing your HYSA.  Unlike a CD, you can access money in your HYSA whenever you need it.  This is why a HYSA is the perfect place to house your emergency fund or save money for important large purchases.  Your money will only grow, and you can access it whenever you want.

You can get better rates of return than a HYSA in other investments, but locking money in a CD is often not worth a 1% greater return to sacrifice the access to money that you may need in the short term.  To emphasize, there are two areas in which other accounts make you sacrifice in exchange for offering you higher rates of return than HYSAs:

1. Risk:  You could lose your money.

2. Inaccessibility:  You cannot access your money until a specific date.

HYSAs are the ideal platform for your savings needs because they let you have it all.  No risk, accessible money, and growth to at least keep up with inflation, if not exceed it.  HYSAs let your money grow while you sleep soundly knowing your money is safe and accessible.

Free Money

I keep mentioning this, but the theme of writing a HYSA article in 2025 is redundancy so you actually open a HYSA right now.  HYSAs give you free money.  Free money without risk or inaccessibility.  Just free money!

HYSAs give you free money.

You pay no fees to open a HYSA.  You pay no maintenance fees on a HYSA.  Your money grows.  You make money while you sleep.  You incur no risk because your savings cannot go down.  It can only go up by the interest rate communicated to you by the bank housing your HYSA.  Your money is accessible.  You can withdraw your money whenever you want, up to the number of transactions the bank allows each month.

You can have a safe emergency fund that accrues interest to keep up with inflation, so your emergency fund can cover the same emergency it can cover today ten years from now.

Other accounts make you consider tradeoffs.  You either incur risk of your money decreasing in value, lose access to your money for a certain length of time, or both.  HYSAs let you have it all.

Open a high-yield savings account today, and start letting your money earn money while you do nothing!