Exploring High-Yield Savings Accounts (HYSA)

It might be tempting to stash your money under the mattress—especially after the fictional “end of the world” during the solar eclipse on April 8th! But in reality, your cash will serve you better in a High-Yield Savings Account (HYSA). In this post, I’ll dive into why we recommend HYSAs, and why they are the smart choice for your money in 2024. Also, how you can earn more without taking on stock market risk.

The Rise of Online Banking and High-Yield Savings Accounts

What is a High-Yield Savings Account?

Gone are the days when traditional banks offered savings accounts with a meager 0.01% interest. With the rise of online banking, you can now get much higher interest rates due to the lower overhead costs of digital banks. Many banks have transitioned to online-only models, eliminating brick-and-mortar locations and passing those savings on to you, the consumer, in the form of higher yields.

As of April 2024, it’s not uncommon to find HYSAs offering between 4% and 5% annual percentage yield (APY). These accounts provide a guaranteed return on your savings without the risks of the stock market.

Why Choose a HYSA Over the Stock Market?

It’s true that you can typically earn around 10% in the stock market, but the key difference is risk. Stock investments can fluctuate, and you could lose money. Meanwhile, a HYSA offers guaranteed returns and is typically FDIC insured, meaning your deposits are protected up to $250,000.

To put things into perspective, let’s compare the returns of a traditional bank versus a HYSA. A traditional savings account at a bank like Wells Fargo might offer a 0.25% APY. If you deposit $10,000, you’ll earn a mere $25 in interest over the year. But, with a 4.5% APY in a HYSA, that same $10,000 earns you $450 annually—without any added risk!

That extra $450 could buy you nearly 90 Starbucks iced coffees, all by just choosing a better place to park your money.

Top 4 High-Yield Savings Accounts in 2024

1. SoFi Savings Account

APY: 4.6%
Key Features:

• Checking and savings account bundle
• No monthly fees
• $300 bonus with direct deposit setup

The SoFi savings account offers a 4.6% APY, but there’s a catch: you need to pair it with a SoFi checking account and set up direct deposits or deposit $5,000 every 30 days to qualify for the high rate. However, if you’re looking for a new bank, this is a fantastic option—especially with the $300 sign-up bonus for setting up direct deposit.

2. EverBank High-Yield Savings

APY: 5.15%
Key Features:

• No monthly fees or minimum balance
• FDIC insured
• In-person branches (Florida only)

EverBank is offering one of the highest APYs available at 5.15%. With no minimum balance and no fees, it’s an attractive option. However, in-person branches are limited to Florida. If you’re comfortable with online banking, EverBank provides a solid, safe way to maximize your returns.

3. Lending Club High-Yield Savings

APY: 5%
Key Features:

• No monthly fees
• ATM access
• $100 minimum deposit to open

Lending Club offers a solid 5% APY with no account fees and convenient ATM access. The only downside is the $100 minimum deposit required to open the account. However, once open, you don’t need to worry about maintaining a minimum balance.

4. UFB Direct Secure Savings Account

APY: 5.25%
Key Features:

• Highest available APY (5.25%)
• No monthly fees or minimum balance
• 24/7 customer support

UFB Direct currently offers the highest APY at 5.25%, making it an incredibly competitive option. They also offer no account fees and 24/7 customer support. However, one downside is that interest rates can fluctuate, so you may need to monitor your account to ensure you’re getting the best rate.

Why Use a HYSA for Your Savings?

HYSAs are ideal for emergency funds or idle cash that you want to keep safe but accessible. Since HYSAs are FDIC insured, your money is protected even in the unlikely event of a bank failure. Unlike the stock market, you won’t risk losing your principal, and you can earn competitive returns without locking up your funds.

Conclusion: Use a HYSA to Maximize Your Returns Safely

In 2024, HYSAs are one of the safest and most profitable places to store your money. With interest rates as high as 5.25% and FDIC protection, they offer a great way to earn a guaranteed return on your savings while keeping your funds easily accessible. Remember, though, that a savings account is not an investment vehicle. If you want to explore more ways to grow your wealth, check out my other blogs on investment strategies!