The No. 1 Mistake People Make With High-Yield Savings Accounts
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It feels safe to see a big balance sitting in your savings account. That's kind of the point.
But the truth is, leaving too much money in a high-yield savings account can quietly cost you thousands of dollars over time.
Why too much "safe" is risky
High-yield savings accounts are great tools. They're FDIC insured, easy to access, and still paying around 4.00% APY as of November 2025. That's light-years better than the 0.01% you'd earn at a traditional bank.
But even at 4.00%, your money won't keep up with the market's long-term growth or inflation.
Let's say you've got an extra $20,000 you don't need for emergencies. Here's how that money grows in an HYSA versus investing it at the S&P 500's historical 10% 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 $284,000 difference over 30 years, all because your money sat in "safe" mode too long.
And with the Fed already cutting rates this fall, those 4.00%+ yields are likely to fade in 2026.
How to keep your savings balanced
The fix is using your HYSA intentionally. Try a simple "bucket" approach to organize your cash:
Short-term (0–2 years): Emergency fund and near-term goals like travel or home repairs. Keep this in your HYSA for safety and access.
Mid-term (2–5 years): Money for a down payment or major purchase. Use certificate of deposits to lock in higher guaranteed returns.
Long-term (5+ years): Money you won't touch for a while -- like retirement savings -- belongs in a diversified investment account where it can grow faster.
Need help building a retirement plan? With our partner, SmartAsset, you can get matched with up to three fiduciary advisors so you can get professional advice.
Don't let "safe" turn into stagnant
Saving money is always smart. Opening a high-yield savings account is even smarter.
But letting that balance grow far beyond your emergency needs? That's where you risk trading safety for lost opportunity.
Your HYSA should be a parking spot -- not a long-term home. Keep what you need for peace of mind, and put the rest to work where it can actually build wealth.
See some of the top high-yield savings accounts available right now to make sure your short-term money is earning the best rate possible.
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.