The No. 1 Mistake People Make With High-Yield Savings Accounts
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I still remember the first time I saw my savings account hit five figures. It felt like I'd finally made it; financial security at last. But here's the truth: Keeping that much cash parked in a savings account was one of the costliest money moves I could've made.
I was confused: How could saving too much money be bad? But keeping too much cash in a high-yield savings account (HYSA) quietly cost me thousands of dollars.
Why leaving too much cash is a mistake
High-yield savings accounts are fantastic tools. They're safe, liquid, and right now some of the top options still pay around 4.00% APY. That's a world away from the 0.01% you'd get at a big bank.
The problem is that even a great HYSA can't compete with the stock market over decades.
Let's say you've got an extra $20,000 you don't actually need for emergencies or short-term goals. Here's how that money grows if you leave it in savings versus investing it at the S&P 500's average 10% annual return:
| Years | HYSA (4%) | Investing (10%) |
|---|---|---|
| 5 | $24,333 | $32,210 |
| 10 | $29,605 | $51,875 |
| 20 | $43,822 | $134,550 |
| 30 | $64,867 | $348,988 |
That's a difference of more than $280,000 by year 30. The No. 1 mistake people make with HYSAs is confusing "safe" with "smart." Yes, you're earning interest. But over time, inflation and missed growth will eat away at your money.
By the way -- Getting a 4.00% APY on a high-yield account is historically high. Interest rates are very likely to drop again later this year -- and maybe beyond.
Don't have an HYSA right now? The Axos ONE® combo savings and checking account is currently paying up to 4.51% on savings balances -- read our review and open an account today.
Axos ONE®
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- Earn a competitive APY on checking and savings
- Pay no monthly maintenance or account fees
- No cap on how much you can save
- Access to fee-free ATM network
- Extra conditions required to earn the advertised rate
- No physical branches for in-person help
The Axos banking bundle offers the potential for very competitive rates and a simple banking experience that puts all of your accounts in one place. The mobile app may have issues, however, and online user reviews raise some concerns about access and customer service.
The Annual Percentage Yield (APY) is accurate as of 10/01/2025. The base and promotional interest rate and corresponding APY for Axos ONE® Checking is variable and is set at our discretion. The base and promotional interest rate and corresponding APY for Axos ONE® Savings is variable and is set at our discretion. Axos ONE® Savings is a tiered variable rate account. Axos ONE® Checking is a non-tiered variable rate account. Interest rates may change as often as daily without prior notice. Fees may reduce earnings.
Promotional terms and conditions are subject to change or removal without notice. Incentive may be taxable and reported on IRS Form 1099-MISC. Consult your tax advisor. After the accounts are opened, the amount of incentive earned will depend on meeting the additional requirements outlined below.
The Axos ONE® Checking account will earn a base rate of 0.00% APY. The Axos ONE® Savings account will earn a base rate of up to 1.00% APY. Axos ONE® accounts are eligible to receive a promotional APY for each statement cycle where the promotional criteria are met during the Qualification Period. To receive the promotional APY on both Axos ONE® Checking and Axos ONE® Savings, the Axos ONE® Checking account must meet both of the requirements in either Option 1 or Option 2 below during the Qualification Period:
Option 1
- Your Axos ONE® Checking account has received monthly qualifying direct deposits of at least $1,500 in total.
- The average daily balance of your Axos ONE® Checking account is at least $1,500.
Option 2
- Your Axos ONE® Checking account has received monthly qualifying deposits of at least $5,000 in total.
- The average daily balance of your Axos ONE® Checking account is at least $5,000.
If both of the requirements in either Option 1 or Option 2 above are met during the Qualification Period:
- The Axos ONE® Checking account will earn a promotional rate of 0.51% APY for the statement cycle in which the requirements are met.
- The Axos ONE® Savings account will earn a promotional rate of up to 4.51% APY for the statement cycle in which the requirements are met.
The Qualification Period begins on the first business day of the month and runs through the 25th of the month. If the 25th of the month is followed by a non-business day, the average daily balance will be calculated including the following non-business day(s). Any qualifying deposits or qualifying direct deposits received after the 25th of the month will count toward the next Qualification Period. The Qualification Period for new accounts will begin on the day the account is approved. New accounts opened on or after the 25th of the month will be eligible to earn the promotional APY starting in the following month.
A direct deposit is an electronic deposit of your paycheck or government benefits, such as Social Security, Disability, etc. International paychecks, international government benefits, other deposits (i.e., online banking transfers, ATM and mobile check deposits, etc.), or person-to-person payments are not considered a direct deposit.
Qualifying deposits only include deposits from the following eligible sources: (i) ACH transfers from external accounts, (ii) inbound wire transfers from external accounts, (iii) check deposits. Qualifying deposits do not include: (i) transfers internal to the bank (i.e., transfers between an account holder’s Checking and/or Savings account), (ii) interest payments, (iii) promotional bonuses, (iv) credits, reversals, and refunds.
Both accounts must be in an open and active status on the 25th of the month and on the date the interest is paid to receive the promotional APY for that statement cycle. If either account closes during the Qualification Period, neither account will be eligible to earn the promotional APY for that statement cycle. Account transactions may take one or more business days from the transaction date to post to the account.
Use buckets to keep things balanced
The solution isn't to ditch your HYSA, but to use it the right way. I've found the bucket method to be the simplest approach:
- Short-term bucket (0–2 years). This is money you'll actually need soon. Think: emergency fund (three to six months of expenses), upcoming travel, home repairs. Keep this in your HYSA. It's safe, accessible, and earns solid interest.
- Mid-term bucket (2–5 years). Saving for a down payment, a new car, or a move? Certificates of deposit (CDs) or conservative investments work well here. You can lock in decent returns without risking the money you'll need in a few years.
- Long-term bucket (5+ years). Retirement, kids' college, or general wealth-building. This is money you won't touch for decades, so it belongs in a brokerage account. That's where compounding really pays off.
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This setup makes it crystal clear what your money is supposed to be doing, and prevents you from accidentally hoarding too much in cash.
Don't let "safe" hold you back
Saving money is smart. Opening a high-yield savings account is even smarter. But letting your balance grow far beyond your emergency needs? That's where you risk holding yourself back.
Your HYSA should be a parking lot, not a warehouse. Keep enough cash for peace of mind, and let the rest of your money actually work for you in the market. That's how you avoid the No. 1 mistake and build real long-term wealth.
Our Research Expert
Jake FitzGerald is a full-time Editorial Strategist and Personal Finance Writer at Motley Fool Money, leading content production and distribution while also writing about credit cards, bank accounts, and other financial products. He has more than a decade of experience editing and shaping financial content to give readers clear, trustworthy money advice. His work focuses on delivering practical insights that empower people to make smarter financial decisions. Off the clock, he’s a fan of college football tailgates and still loyal to his favorite putter -- despite what his short game suggests.