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Millennials enjoy using the endless resources available to us online to make sure that we’re getting the most bang for our buck. Maybe that’s getting the best deal on your next vacation, or, it could be getting the most out of your cash savings with a High Yield Savings Account (HYSA).

A HYSA is a type of savings account that pays a significantly higher interest rate than the national average. These accounts are typically offered by online banks that don’t have the expenses associated with maintaining physical branch locations, and thus are able to pass those savings onto their customers by paying higher account interest rates.

A HYSA can be the foundation of your financial plan, serving as an attractive place to park cash for your emergency fund and to hold cash for any short-term goals.

Here are some considerations when opening a HYSA:

1. Selecting a Bank – Make sure that you select a bank with FDIC Insurance. This means that if your bank ever fails, your money will be insured up to the applicable FDIC amount. Also review the interest rate that the bank is offering in addition to any minimum balance requirements or associated account maintenance fees. The following NerdWallet article is updated frequently and is a great starting place to review the top HYSAs.
2. Accessibility – Whether your HYSA is being used as an emergency fund or to save for short term goals, having quick access to your cash is extremely important. Your HYSA can be linked to your checking account allowing you to transfer cash electronically and quickly when needed. Furthermore, your cash isn’t locked up in the HYSA, it can be accessed at any time in any amount without penalty.
3. Risk/Fluctuation – It’s important to understand that your cash in your HYSA is not at risk to decline or fluctuate on a daily basis like it may if it were invested in the stock market. Your balance will earn the stated interest rate which is variable, meaning that the interest rate may increase or decrease from time to time based on market interest rates and other factors.

The Bottom Line: A HYSA is an incredible option to hold cash for your emergency fund or short-term goals while earning an attractive interest rate compared to the national average. Make sure that you select a reputable bank that offers FDIC Insurance and preferably no account minimums or fees. While these accounts protect your cash from decline as opposed to this possibility if invested in the stock market, a HYSA is not the best option to hold cash for long-term investments or goals.

If you’d like to learn more about how to make a HYSA the cornerstone of your financial plan, you can schedule a complimentary Discovery Call to discuss your personal situation.

Disclaimer: This post is meant for educational purposes only and is not intended to be personal advice. Please consult with a qualified professional before making any financial decision.