I’m extremely financial illiterate and unfortunately don’t have many people who can educate me about it so I’m trying to learn on my own. Today I’ve heard about HYSA for the first time.
So what exaclty is it and how does having one benefit you? Are there any catches or downsides?
From what I read, it sounds like a type of banking account where you basically deposit your extra cash into, and the bank pays you a higher percentage of interest on the cash you deposited with them than you would with a regular savings account?
So for example, if I had $10,000 in a HYSA and their interest rate is 4.5%, I could earn $450 in a year from them compared to if I had $10,000 in a regular savings account with an interest rate of 0.01%, where I would only earn $1 in a year?
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HYSAs aren’t a classification, they are a normal savings account that are given a fancy name. Like how “underwater ceramics technician” is a dishwasher.
Bank of America and Chase start out at only 0.01%. Your local credit union may be from 0.25%-1% (though I’ve seen some at 0.01%). I have Capital One with 4.3% (so I earn 430x more interest, pre-tax, than a Bank of America savings account).
Then you have money market funds (not money market accounts) through brokerages. I have >$20k sitting in Fidelity’s SPAXX currently at 4.98% (I earned nearly $100 this past month). They aren’t technically savings accounts though so the insurance is different.
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