The ‘High-Yield Lazy Account’ Move That Can Give Your Savings a Lift

Building wealth over time takes both saving and investing. While some of your money should be placed in investments with the potential for higher returns, it is also wise to keep cash available for emergencies and other short-term needs.

That cash does not need to remain in a low-interest traditional savings account. A high-yield savings account, or HYSA, can help your balance grow while still keeping the money easy to access.

What the “high-yield lazy account” means

High-yield savings accounts typically pay higher annual percentage yields, or APYs, than standard savings accounts. Many currently offer rates around 4%. They are protected like ordinary savings accounts for up to $250,000 per depositor, per bank, and per ownership category, as long as the institution is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. These accounts often have low or no fees and are simple to maintain, which is why they are sometimes described as “lazy.”

You can open one and set up automatic transfers from your checking account, allowing you to earn the extra yield without having to actively manage it.

Why it can outperform what many savers do

Compared with traditional savings accounts, HYSAs generally do not add extra risk, so there is little downside to keeping money there while earning a better APY.

For example, if you kept $10,000 in a traditional savings account earning 0.38% APY, you would make only $38 in interest over a year. In a HYSA earning 4%, that same balance would generate $400.

The main hurdle is finding the right account, since your current bank may not offer one. Online banks are often more likely to provide HYSAs because they do not have the costs of operating physical branches. A list of the best high-yield savings accounts can help narrow the search to options with strong rates, low fees and reasonable minimum deposits.

How to set one up without overcomplicating it

When comparing HYSAs, focus on accounts with no monthly fees, a competitive APY, FDIC or NCUA insurance and no strict balance requirements. After opening the account, connect it to your checking account so you can turn on automatic transfers.

Even so, a high-yield savings account should not replace long-term investing in assets such as stocks. It is also important to remember that HYSA rates can change, so the advertised APY is not guaranteed forever. Banks can lower rates at any time based on factors such as changes in Federal Reserve policy.