The No. 1 Mistake People Make With High-Yield Savings Accounts
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High-yield savings accounts (HYSAs) are a fan favorite for anyone sitting on a large pile of cash. They're safe, simple, and earn way more interest than traditional bank accounts. Right now, some are paying 4.00% APY or higher, which is about 10X the national average.
But here's the mistake I see all the time -- even among money-savvy folks: They keep too much cash sitting there.
Hoarding cash can feel smart, especially in uncertain times. But in reality, it's way less productive and you could be leaving tens of thousands of dollars on the table by not investing that money instead.
Your HYSA is not a long-term investment
High-yield savings accounts are great for what they're designed for -- liquid safety, short-term savings, and reliable access to your money.
But they're not built to grow your wealth over time.
Even at 4.00% APY, an HYSA can't compete with long-term investing options like investing in stocks. Historically, the overall stock market has returned about 10% per year on average, and that compounds like crazy over time.
Let's say you keep an excess $20,000 in a high-yield savings account for 20 years, earning a solid 4.00% APY.
Over that time, you'd end up with about $43,822.
Not bad… until you see what that same $20K could do if you invested it instead at a 10% annual return:
| Years | HYSA (4.00%) | Investing (10%) |
|---|---|---|
| 5 | $24,333 | $32,210 |
| 10 | $29,605 | $51,875 |
| 20 | $43,822 | $134,550 |
Growing at an average of 10% per year, you'd more than triple the growth over a 20-year period -- just by choosing to invest instead of letting your cash sit in savings.
Now imagine that gap across your entire savings habit.
The right way to use your high-yield savings account
Having an HYSA is smart for short-term cash storage. Here's the type of money that should be kept inside:
- Emergency funds: Like three to six months of essential expenses in case of job loss or financial hiccup.
- Short-term goal money: Eg. savings for a vacation, wedding, or home reno in the next one to two years.
- Temporary parked cash: If you're in between investments and need a short-term parking lot to store a pile of cash.
A great HYSA option right now is SoFi Checking and Savings (Member FDIC) with an annual percentage yield (APY) up to 4.30% and no account fees. Read our full review here to learn more.
SoFi Checking and Savings
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Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 1/31/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
- Competitive APY on both Savings and Checking
- No monthly account fee
- Welcome bonus up to $300 (direct deposit required)
- ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- FDIC insured (up to $3M with opt-in to SoFi Insured Deposit Program)
- Early access to direct deposits
- Tools to help you track savings goals
- Combo account only; no stand-alone savings or checking
- Maximum Savings APY requires direct deposit
- No branch access; online only
- Overdraft protection requires monthly direct deposit minimum
For those who plan to set up direct deposit with their new account, we think SoFi Checking and Savings (Member FDIC) is hard to beat. Not only does this savings account offer a strong APY, but the linked checking account earns an above-average rate, too -- which is a rare perk. Plus, new customers earn a bonus of up to $300 with eligible direct deposit. Frankly, it's the kind of combo that could make it worthwhile to switch banking relationships.
Where to put extra cash instead
For any money above and beyond your short-term needs, the next best move is to move it into better-performing accounts.
Better alternatives to stash your extra cash:
- CDs (certificates of deposit): Some short-term CDs have attractive rates right now in line with HYSAs, but they are fixed for 6-12 months. CDs are great for short- to mid-term goals where you don't need immediate access, and want a guaranteed return.
- Money market accounts: These work similar to HYSAs, but sometimes offer check-writing abilities and higher rates.
- Index funds: If your goal is long-term growth, index funds give you diversified stock market exposure with a low expense ratio.
- Treasuries or I bonds: Government-backed, low-risk investments that hedge against inflation.
Final thoughts: Make your money work harder
High-yield savings accounts are an excellent tool, when used for the right job. They're perfect for emergency funds, short-term goals, and keeping your cash safe and accessible.
But they're not built to grow your wealth over the long haul.
If you're letting large amounts of money sit in an HYSA for years, you're likely missing out on way better growth opportunities elsewhere.
For the best rates available today, compare the top high-yield savings accounts and start earning more on your money.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.