I used to be naive about earning interest. For over a decade, I parked all my cash in a basic checking account, earning pennies.
That one lazy habit probably cost me over $10,000 in missed growth throughout my 20s and 30s. Ouch!
But a few years ago, I wisened up and learned about high-yield savings accounts (HYSAs). I opened one online and last year alone, I earned $798 in interest.
Here’s what you need to know about high-yield accounts, and how to 50x your earning rate.
Why your checking account is probably letting you down
Checking accounts are built for spending — not saving. The problem is that most people use them for both.
Right now, the average checking account pays just 0.07% APY. That means $10,000 sitting there all year earns you just $7 in interest. Not even enough to buy a combo meal at In-N-Out Burger.
Meanwhile, some high-yield savings accounts (HYSAs) are paying over 4.00% APY. Same $10,000, but now you’re earning $400 a year in interest.
That’s over 50x the interest just for moving your money to a better spot.
HYSAs are just as safe and accessible
Here’s what most people don’t realize (I didn’t either at first): High-yield savings accounts work basically the same as regular savings accounts — except they actually pay you meaningful interest.
You can move money in and out easily. Most HYSAs link directly to your checking account (even at a different bank), so transfers are quick and painless.
And they’re just as safe. Most HYSAs are FDIC insured up to $250,000, meaning your money is protected even if the bank goes under.
Even better, thanks to modern fintech banks, many of the top online HYSAs come with:
- No monthly fees
- No minimum balance requirements
- Unlimited transfers
- Clean mobile apps and fast support
The setup I use
I didn’t ditch my old bank entirely. I still use it for checking accounts and my day-to-day banking.
But I keep as little cash as possible there. All my cash savings (emergency fund, short-term savings for travel, etc) are all stored in my HYSA.
Here’s my current setup:
- Checking account: I keep about one month of expenses for bills and spending. This is where I get my paycheck deposited and pay all my bills.
- HYSA: I keep three to six months of expenses for emergencies and other short-term goals. This all earns 4.00% APY (about $3 in interest per day with my current balance!)
My accounts at both banks are connected to each other for easy transfers. It gives me the flexibility to move money around however I want while also earning a high interest rate.
How to switch (or add) a high-yield savings account
Opening an HYSA is super easy. It takes about 10 minutes online.
Here’s how to do it:
- Shop around for an account offering a high APY. Here’s our list of top HYSA’s right now, with rates up to 4.40% APY.
- Open the account with a small deposit (most have no fees or minimums).
- Link it to your current checking so you can transfer funds easily.
- Move your savings. Feel free to start slow, but once you see how much interest you’re earning, you’ll probably move your entire cash pile into your new HYSA.
- Automate any recurring deposits you want to grow.
Pro tip: Set a calendar reminder every six months to check your APY. If your rate drops or circumstances change, it might be time to re-evaluate.
Stop forfeiting free money
Don’t let your money sit around doing nothing.
If you’re earning close to 0% interest like I was for many years, you could be missing out on hundreds (or even thousands) of dollars every year in free, no-risk growth.
Opening a high-yield savings account is fast, easy, and makes your money more productive overnight. Compare all the top high-yield savings accounts here and start earning more today.
