High Yield Savings vs. Regular Savings: Which One to Choose?

Apart from the interest rate, high-interest savings accounts and regular savings accounts are typically similar. However, both accounts offer some unique benefits. Read on to understand which option suits your needs.
High-yield savings accounts
High Yield Savings vs. Regular Savings: Which One to Choose?
High yield savings accounts and regular savings accounts each have their unique benefits and limitations, making them suitable for various financial objectives and lifestyles. Let's explore which one is better for your financial requirements.

In this article

We’re all acquainted with the typical, standard savings account. It’s a secure location to park your funds, generate modest interest, and maintain a separation between your savings and checking accounts, making it less tempting to spend on impulse. However, what about savings accounts that incorporate additional terms like high-interest or high-yield? What distinguishes high yield savings accounts from regular savings accounts, and are there any hidden red flags associated with them?

High-yield savings accounts (HYSA) and regular savings accounts each have their unique benefits and limitations, making them suitable for various financial objectives and lifestyles. This blog explores the basic differences between these two account types and helps you figure out which one is a better option for you. Supercharge your savings with a savings account with Beem and watch your money grow with the best high interest rates.

What’s the Difference Between a High Yield Savings Account and Regular Savings Account?

As the name suggests, a high-yielding savings account offers incredibly higher interest rates as compared to most of the regular savings accounts available. An account is considered high-yielding if it provides an interest rate that’s roughly ten to twenty times greater than what you’d typically find in regular savings accounts offered by traditional banks in the US.

On the other hand, a regular savings account is also known as a “monthly saver” because it helps in making monthly deposits. While it generally offers higher interest rates compared to standard savings accounts, it may not offer interest rates as high as a High-Yield Savings Account.

If you are looking for structured savings habits or want to save for specific events such as weddings or vacations, a regular savings account may be an excellent option. The requirements for regular savings accounts can vary, but generally involve making monthly contributions, usually ranging from $10 to $500. 

Apart from the interest rate, high-interest savings accounts and regular savings accounts are typically similar. However, this discrepancy becomes even more significant when you consider that the interest in high-interest savings accounts is compounded monthly.

What Can You Earn With a Traditional Savings Account vs. High Yield Savings Account?

With the rise of online banks and increased competition, high-yield savings accounts have become more prevalent, considering online institutions usually offer the most competitive rates. Compared to standard savings accounts, HYSA can provide notably higher interest rates, with many currently yielding annual percentage yields (APYs) of approximately 3.5% to 4.5%, and sometimes even exceeding these figures. In contrast, standard savings accounts typically offer interest rates ranging from 0.01% to 0.35% on the funds deposited into the account.

Also Read: 529 Plans Vs High Yield Savings

Traditional vs. High Yield Savings: The Basics

Opening an Account

You can usually open a traditional savings account at a local bank, credit union, or financial institution. Many of the institutions also offer an option to open an account online. Online lenders offer high-yield savings accounts that can be opened and managed entirely through online platforms or apps.

Required Minimum Balance

Minimum balance requirements vary between institutions. While some may have none, others charge a set amount for account opening. Some require a minimum balance to keep the account active.


Fees fluctuate based on where you open your account. Regardless of the account type, seek options with minimal fees, encompassing monthly maintenance and overdraft fees.


While traditional savings accounts had a limit of six withdrawals per month, this restriction was indefinitely suspended in 2020 by the Federal Reserve. However, some institutions still maintain this limitation. If you prefer unlimited withdrawals or transactions, consider high-yield savings accounts that offer considerable flexibility.

High-yield savings accounts

Traditional Savings Accounts vs. High Yield Savings Accounts: Which One Should You Get?

There are numerous options available out there in the market, and it gets confusing to make the right choice. There may not be a perfectly right or wrong option; your choice between a high-yielding account and a regular savings account depends on your reasons for opening that account in the first place. Here, we discuss a few parameters that can be considered to make an informed decision.

Parameter: Digital Banking

Choice: High Yield Savings Account

If you are comfortable with digital banking and don’t require physical branches, a High-Yield Savings Account (HYSA) from an online bank is a strong choice. Online banks offer HYSA options that can be managed entirely through digital platforms or mobile apps. This choice provides the convenience of handling your finances from the comfort of your home or on the go, with no need for physical bank visits.

Parameter: Interest Rates

Choice: High Yield Savings Account

If maximizing your savings returns is a top priority, consider a HYSA. High-yield savings Accounts typically offer significantly higher interest rates compared to traditional savings accounts. As your balance grows, the interest earned in a HYSA can result in substantial gains over time. This choice is particularly advantageous for individuals looking to grow their savings with competitive interest rates.

Parameter: Fee Efficiency

Choice: High Yield Savings Account

For reduced fees, including monthly maintenance and overdraft charges, opt for a HYSA from an online bank with lower operational costs. Online banks are often associated with HYSAs and can pass on cost savings to customers through reduced fees. This choice can positively impact your overall savings strategy by minimizing expenses associated with maintaining your savings.

Parameter: Short-Term Goals

Choice: Regular Savings Account

If your savings goals are short-term and you need quick access to your funds, a regular savings account is a practical choice. Regular savings accounts offer accessibility, making them suitable for those with short-term objectives, such as saving for upcoming expenses you’ll need within a year.

Parameter: Flexibility

Choice: Regular Savings Account

Choose a regular savings account if you anticipate occasional withdrawals and value flexibility in managing your savings. Regular savings accounts offer more flexibility when it comes to withdrawals, making them ideal for individuals who expect to dip into their savings from time to time.

Parameter: Low Account Balance

Choice: Regular Savings Account

If you are beginning to save or have a modest balance, a regular savings account with lower or no minimum balance requirements is a suitable option. Regular savings accounts are accessible to individuals with lower savings balances, ensuring that your savings efforts can start with a minimal financial commitment.

Parameter: Frequent Cash Deposits

Choice: Regular Savings Account

If you frequently deal with cash and your online bank is not part of an ATM network, a regular savings account may be more convenient for depositing cash. This choice allows you to deposit cash into a traditional bank account with physical branches and then transfer it to your online savings account, offering a practical solution for those who handle cash regularly.

CriteriaHigh-Yield Savings AccountRegular Savings Account
Account TypeOnline accounts with superior APYConventional accounts in banks or credit unions
Interest RateElevated interest rates [3.5% – 4.5%]Modest interest rates [0.01% – 0.35%]
Banking AccessAccessible through online or mobile bankingAccessible in person, online, via mobile, or by phone
FeesFewer or lower fees, including maintenance feesPotential maintenance and charges for excessive withdrawals
Minimum DepositLower minimum deposit requirementsMinimal initial deposit requirements
Withdrawal LimitsGenerally more adaptable, depending on the bankAllows up to six monthly withdrawals before penalties
ATM AccessAvailability varies by bank, may or may not include ATM accessPossible access to ATMs

The choice between high yield savings accounts and regular savings accounts is evident in personal finance. While both options have their pros and cons, HYSA offers substantial benefits for those aiming for financial growth. With higher earnings, digital convenience, and lower fees, HYSAs are the superior choice for achieving long-term financial success. Your financial aspirations and preferences will be your guide, and you’ll make an informed decision as you explore your options.

Frequently Asked Questions

Q: Are high yield savings accounts safe? 

Yes, high yield savings accounts from well-known banks are usually safe. They’re often insured by organizations like the FDIC, which protects your money up to a specific limit, ensuring your deposits are secure.

Q: What’s the main benefit of a high yield savings account compared to a regular one?

The significant advantage of a HYSA is that it gives you a lot more interest on your money, often between 3.5% and 4.5%. Regular savings accounts offer lower interest, usually around 0.01% to 0.35%, which means your money can grow more in the long run with an HYSA. Check out Beem to get updated interest rates and compare the best high yield savings accounts that align with your savings goals and priorities.

Q: Can I have both HYSA and a regular savings account?

Absolutely! Many people have both. You can use a high yield savings account for saving money long-term and a regular savings account for shorter-term expenses. It’s a great way to balance your financial strategy.

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

Fatema Yusuf

Fatema Yusuf

A passionate writer, who loves to write about anything and everything. She usually writes about finance and investment options. She enjoys talking about personal development and loves to help people grow. she loves to cook for kids and upcycle old stuff to give them a new life.

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts

APY vs Interest Rate
APY vs Interest Rate
When understanding the returns on your savings, investments, or loans, two crucial concepts come into play: the Annual Percentage Yield (APY) and the nominal Interest Rate. Let's explore how APY vs interest rate can impact your financial decisions.
Both APR (Annual Percentage Rate) and APY (Annual Percentage Yield) have the power to shed light on your financial journey, providing clarity and confidence as you navigate the intricate landscape of interest rates. Let's delve into how APR vs APY differ!
Annual Percentage Yield Vs Interest Rate
Annual Percentage Yield Vs Dividend Rate
While Annual Percentage Yield (APY), the master of compounding returns, promises exponential growth, Interest Rate, the traditional workhorse, offers steady earnings. Check out how distinction between these two can shape the fate of your investments.
Yield vs Return
Yield vs Return
Investments and savings are often complex to understand. In an effort to demystify all the complexities, here is a detailed understanding of how yield vs return work, as well as details on how the two are different. Read on to know more.

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: