One can help you multiply your earnings over time thanks to their higher interest rates.

We've all had to grow up saving money: It may have started with saving those dollars earned from your childhood lemonade stand or allowance, then developed into regular deposits from after-school jobs, paid internships, first jobs, and any side hustles in-between. Expenses, investments, and spontaneous purchases aside, your hard-earned money automatically goes into your savings account. After all, that's the best place for your money, right? But stop to consider this: While the traditional savings account has a low-interest rate, there are other variations of savings accounts that can multiply your hard-earned dollars while they sit unused in the bank.

woman counting money
Credit: Mykola Sosiukin / EyeEm / Getty Images

A high yield savings account (HYSA) is just the place where your deposited money can potentially earn a higher interest rate as opposed to the customary savings account. Colleen McCreary, chief people officer of Credit Karma, confirms: "If you want to earn more for every dollar stashed outside of stocks and bonds, high-yield savings the account can be a great place to start."

Automating your wealth in this way is the best benefit of opening a high-yield savings account. "A high-yield savings account can help your savings grow over time," says McCreary. "It's not uncommon to get a shockingly low-interest rate (e.g., .01 percent) on a traditional savings or checking account, while interest rates on high-yield savings accounts can be higher, helping your hard-earned money grow over time."

When deciding on what type of HYSA is right for you, know the account details. Some HYSA accounts may come with monthly maintenance fees or the requirements to maintain a certain monthly balance. McCreary urges savers to find HYSA accounts that don't charge fees or understand the upfront charges, so you are not surprised at the end of each month.

"Before you sign up for one, do your research to find the highest rates and best terms for your situation," says McCreary. "Find out the interest rate, fees, required initial deposit, monthly balance requirements, and whether there's a monthly withdrawal or transaction limit or any minimum deposits required. Also, consider banks or online savings accounts that are FDIC-insured so your money is protected."

You've already done all of the work. Now, let your money work smartly for you. McCreary leaves it with this, "The key is to always read the fine print before you sign yourself up for something so you know the terms and understand what you're obligated to pay each cycle."


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