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High-yield savings accounts offer rates above traditional savings
The national average savings rate is 0.38%, while top HYSAs can pay more than 4% APY.
High-yield savings accounts, or HYSAs, are positioned as a higher-earning alternative to traditional savings accounts because they generally function the same way but offer much higher interest rates, according to Yahoo Finance.
The outlet notes that the national average interest rate for savings accounts is 0.38%, while the best high-yield savings accounts can offer rates upwards of 4% APY.
Yahoo Finance also outlines common uses for HYSAs, including building an emergency savings fund, saving for a home or car down payment, and setting aside cash for upcoming expenses such as vacations.
For emergency funds, the article says many financial experts recommend saving at least three to six months of living expenses, while it also cites guidance that a mortgage down payment on a conventional loan could cost as much as 20% if borrowers want to avoid private mortgage insurance, and that car loan down payments are often recommended in a 10% to 20% range.