A high-yield savings account is a savings account that pays significantly more interest than a regular savings account. These accounts are insured by the FDIC and allow you to withdraw money whenever you need it, unlike CDs. Banks offer higher rates because they use the money you deposit to invest.
A regular savings account might pay 0.01% APY, earning just $1 per year on $10,000. A high-yield savings account might pay 4.5% APY, earning $450 per year on the same $10,000. You can withdraw your money anytime without penalties.
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