: What’s a HYSA and is it safe to use one ?
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The basic gist is banks need cash deposits, both so they can take money and invest it for profit and give out loans, but also because they need to keep some cash in reserves by law to do these things.
So it comes and goes, but banks sometimes really, really, really want people to deposit tons of cash, quickly. So they offer very high interest rates on High Yield Savings Accounts to attract those depositors.
There isn’t really any safety concerns, they are bank accounts and very secure as far in places to put your money is concerned. If you are in the US anything under $250,000 is insured by the US Government so you’re not at risk of losing your money should the bank default.
The biggest risk is that the interest rates are extremely volatile as they are based on how much the bank needs cash at that exact moment. Don’t expect the rate they advertise to last a full year, let alone a full month. For example during the days COVID when everyone was getting checks from the Government and putting them into banks, the banks didn’t want cash any more and the rates plummeted to essentially nothing.
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