The No. 1 Mistake People Make With High-Yield Savings Accounts

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High-yield savings accounts (HYSAs) have become a go-to option for people looking to grow their cash without taking on risk. With interest rates much higher than traditional savings accounts, they offer a great way to earn passive income while keeping money safe and accessible.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. But despite their benefits, many people make a critical mistake when using these accounts — one that could cost them thousands of dollars in the long run.Don’t treat your HYSA like a long-term investmentWhile HYSAs are great for growing your money safely, they are not designed for long-term investing.Many people make the mistake of depositing large sums of money into these accounts and leaving it there for years, thinking they’re making a smart financial move. But in reality, this strategy could be costing you money.Here’s why:You’re missing out on higher returns: While HYSAs are safe, they can’t compete with long-term investments like index funds or stocks. Historically, the stock market has averaged annual returns of around 10%, significantly outpacing high-yield savings accounts.Inflation will outpace your savings: Even if your HYSA earns 4.00% APY, inflation typically rises at an average rate of around 2% to 3% per year. That means your real purchasing power is only growing by a small margin, if at all. Over time, inflation can erode the value of your money.Interest rates fluctuate: Unlike fixed-rate investments, HYSA rates can go up or down depending on the Federal Reserve’s moves. If rates drop, your earnings could shrink without notice.The right way to use a high-yield savings accountHigh-yield savings accounts are great — they’re just not meant for long-term wealth building. Here’s how to use them the right way:Emergency fund savings: Keep three to six months’ worth of essential expenses in an HYSA. This ensures your emergency fund is accessible while earning some interest.Short-term savings goals: If you’re saving for a vacation, wedding, home renovation, or another expense within the next couple of years, an HYSA is a great place to park your cash.A holding spot for investments: If you’re planning to invest but waiting for the right opportunity, an HYSA can temporarily store your money while earning interest.Start earning more than 10 times the national average on your money. Apply for a high-yield savings account today.Where to put extra cash insteadIf you have a large amount of money sitting in an HYSA beyond what you need for emergencies or short-term goals, here are better alternatives:Index funds: If your goal is long-term growth, consider investing in a diversified stock market fund. Over decades, these investments historically outperform savings accounts.Certificates of deposit (CDs): If you don’t need immediate access to your money, short-term CDs (6- to 12-month terms) may offer even higher interest rates than HYSAs.Money market accounts: These accounts function similarly to HYSAs but may offer check-writing privileges and higher interest rates in some cases.Treasury bills or I bonds: For a low-risk investment with better protection against inflation, U.S. government bonds can be a solid choice.Looking for the best options to maximize your money? Check out the top high-yield savings accounts available right now.Make your money work for youHigh-yield savings accounts are an excellent tool — but only if you use them correctly. They’re perfect for emergency savings and short-term goals, but shouldn’t be treated as an investment vehicle. If you’re keeping large amounts of cash in an HYSA long term, you’re likely missing out on better opportunities for growth.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. SoFi disclosure:1. Up to $300 Bonus Tiered DisclosureNew and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.2. APY disclosuresSoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

High-yield savings accounts (HYSAs) have become a go-to option for people looking to grow their cash without taking on risk. With interest rates much higher than traditional savings accounts, they offer a great way to earn passive income while keeping money safe and accessible.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

But despite their benefits, many people make a critical mistake when using these accounts — one that could cost them thousands of dollars in the long run.

Don’t treat your HYSA like a long-term investment

While HYSAs are great for growing your money safely, they are not designed for long-term investing.

Many people make the mistake of depositing large sums of money into these accounts and leaving it there for years, thinking they’re making a smart financial move. But in reality, this strategy could be costing you money.

Here’s why:

1. You’re missing out on higher returns: While HYSAs are safe, they can’t compete with long-term investments like index funds or stocks. Historically, the stock market has averaged annual returns of around 10%, significantly outpacing high-yield savings accounts.
2. Inflation will outpace your savings: Even if your HYSA earns 4.00% APY, inflation typically rises at an average rate of around 2% to 3% per year. That means your real purchasing power is only growing by a small margin, if at all. Over time, inflation can erode the value of your money.
3. Interest rates fluctuate: Unlike fixed-rate investments, HYSA rates can go up or down depending on the Federal Reserve’s moves. If rates drop, your earnings could shrink without notice.

The right way to use a high-yield savings account

High-yield savings accounts are great — they’re just not meant for long-term wealth building. Here’s how to use them the right way:

• Emergency fund savings: Keep three to six months’ worth of essential expenses in an HYSA. This ensures your emergency fund is accessible while earning some interest.
• Short-term savings goals: If you’re saving for a vacation, wedding, home renovation, or another expense within the next couple of years, an HYSA is a great place to park your cash.
• A holding spot for investments: If you’re planning to invest but waiting for the right opportunity, an HYSA can temporarily store your money while earning interest.

Where to put extra cash instead

If you have a large amount of money sitting in an HYSA beyond what you need for emergencies or short-term goals, here are better alternatives:

• Index funds: If your goal is long-term growth, consider investing in a diversified stock market fund. Over decades, these investments historically outperform savings accounts.
• Certificates of deposit (CDs): If you don’t need immediate access to your money, short-term CDs (6- to 12-month terms) may offer even higher interest rates than HYSAs.
• Money market accounts: These accounts function similarly to HYSAs but may offer check-writing privileges and higher interest rates in some cases.
• Treasury bills or I bonds: For a low-risk investment with better protection against inflation, U.S. government bonds can be a solid choice.

Make your money work for you

High-yield savings accounts are an excellent tool — but only if you use them correctly. They’re perfect for emergency savings and short-term goals, but shouldn’t be treated as an investment vehicle. If you’re keeping large amounts of cash in an HYSA long term, you’re likely missing out on better opportunities for growth.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

SoFi disclosure:
1. Up to $300 Bonus Tiered Disclosure

New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.

2. APY disclosures

SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] Read More