What Is High-Yield Savings Account? Meaning & Example
Definition
A high-yield savings account pays a higher interest rate than a typical savings account, often from online banks. It is a popular home for emergency funds.
Related terms
An emergency fund is cash set aside for unexpected expenses such as job loss, medical bills or urgent repairs. Many people aim for three to six months of essential expenses.
APY (Annual Percentage Yield)APY is the yearly return on savings including the effect of compounding. It is useful for comparing savings accounts and CDs.
Certificate of Deposit (CD)A certificate of deposit is a savings product that pays a fixed rate for a fixed term. Withdrawing early usually triggers a penalty.
What is High-Yield Savings Account?
A high-yield savings account pays a higher interest rate than a typical savings account, often from online banks. It is a popular home for emergency funds.
Can you give an example of High-Yield Savings Account?
Keeping a $10,000 emergency fund in a high-yield account earns noticeably more interest than a standard account.