From Fermenting To Finance

And family! Life hacks I wish I knew sooner that might just help you.

For those of you researching high yield savings accounts, I thought I’d pass along my “two cents” from the little bit of research I did in 2023.

Disclaimer: These are the BASICS. I didn’t know all this myself a few years ago and wished someone would have told me…!

What’s a HYSA?

High Yield Savings Accounts (HYSA) are liquid savings accounts that have a variable interest rate (APY) with the economy. So when inflation is low, a HYSA interest rate will also be lower. When inflation is high, like it is right now, the HYSA rate will also be higher. Which means the over 4% rate you can find in April, and now 5% rate in Dec. of 2023 will not last forever.

Just to be clear: A HYSA is not a certificate of deposit (CD). Your money is liquid and accessible at any time. There’s really no risk! HYSA are usually FDIC insured up to $250,000 just as any other bank, with the exception of Wealthfront. Wealthfront is FDIC insured up to 8 million because they spread money over 32 different partner banks.

A HYSA is where I keep my emergency fund. While it sits there, I get paid interest every month!

For example, say you have $15,000 in your emergency fund. If you make no withdrawals or additions in one year’s time, at a 4.3% APY, you’ll have made $645! That’s approximately $54 dollars of passive income every month.

Top Rated High Yield Savings Accounts

If I’ve convinced you it’s time and you’re ready to open one, the only suggestion I have is to shop around. I’ve found doing your research on the banking institution is important. A higher rate can sometimes be a gimmick for new online banks to gain customers. In this case, it tends to drop off after say, 6 months (speaking from experience). So for whatever it’s worth, if you don’t want to bank hop to continuously find a high APY, here are the top 3 banks with the most traditionally stable interest rates with NO FEES (a requirement for me). They’re not the highest rate, but people swear by the customer service and historically higher rates, so I feel comfortable recommending the following:

  1. Ally was recommended the most by a FB financial group. It’s also backed by Warren Buffet if you are a fan. 3.75% rate in April 2023; 4.25% in Dec. 2023
  2. Marcus by Goldman Sachs has a competitive rate with a large following. They sometimes offer a $100 signing bonus. 3.75% rate as of April 2023; 4.4% rate in Dec 2023
  3. Wealthfront was the one I choose and am really happy with the interest and ability to place my funds into different savings categories (all within one account). They’ve done a great job raising the interest since I started from 4.05% to 4.55%, and now 5%. With a referral link, I’ve had a temporary boost up to 5.5%! The only draw back so far is that the checking account that accompanies this HYSA isn’t offered for joint accounts. Checking is only available for individual accounts. But I’ve been told it be available for joint accounts in the future. If you’re interested in just parking your savings and connecting the account to your regular checking, this side steps the issue and wasn’t a deal breaker for me. Actually, I like that the money isn’t readily available for spending! Current rate = 4.3% as of April 2023; 5% as of Dec 2023

Here’s a Wealthfront referral code to get the extra 0.50% boost that can be extended for up to 6 months. https://www.wealthfront.com/c/affiliates/invited/AFFC-MPIR-VG6Y-ZA07

Other HYSA to Consider

Other HYSA accounts worth mentioning but require further research (listed in random order of importance):

  • SoFi has “vaults” similar to Ally’s “buckets” or Wealthfront’s “categories”; 4.0% rate in April 2023, 4.6% rate in Dec 2023
  • CIT Bank; 4.5% rate in April 2023, 4.65% rate in Dec 2023
  • Betterment; 4.20% rate in April 2023, 4.75% rate in Dec 2023
  • AMEX HYSA; 3.75% rate in April 2023, 4.3% in Dec 2023
  • Synchrony bank; 4.00% rate in April 2023, 4.75% rate in Dec 2023
  • Lending Club; 4.25% rate in April 2023, 4.65% rate in Dec 2023
  • Raisin; 5.27% rate through partner banks as of Oct 2023, 5.5% rates in Dec 2023 through Prism Bank

One thing to keep in mind: accrued interest is considered taxable income by the IRS at the end of the year; therefore, you will want to set aside a small amount of money to cover this accordingly.

Additional Resources

Interested in learning more about budgeting and building wealth? You might be interested in the following resources:

Happy saving and earning!

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