What Is a HYSA?
A HYSA, or high-yield savings account, pays a meaningfully higher interest rate than a traditional bank savings account, usually offered by online banks.
Traditional brick-and-mortar banks often pay a fraction of a percent on savings. Online banks, with lower overhead, can pay several percentage points more, sometimes 10 to 20 times the national average.
HYSAs are FDIC-insured up to the same limits as any other bank account, so the higher rate does not come with extra risk. The tradeoff is usually convenience: money in a HYSA typically takes a day or two to transfer to a checking account, unlike a savings account at your everyday bank.
A HYSA is a common home for an emergency fund, since it needs to earn something but must not be exposed to market risk.