Is a high-yield savings account safe?

High-yield savings accounts can help keep your money safe while putting a little more in your pocket with interest earnings. but later rapid decline of Silicon Valley Bank and Signature Bank in New York At the start of this year, the safety of your money within any bank account may be top of mind.

Rest assured, high-yield savings accounts from insured banks and credit unions are one of the safest places to keep your money — as a type of deposit account, your High Yield Savings Account Insured (up to limits), not subject to market volatility and easily accessible.

High-yield savings accounts have a few different ways to protect your money. You can now see how much more you can earn with a high-yield account here.

Is a high-yield savings account safe?

Here are three primary reasons why high-yield savings accounts are safe to keep your money.

FDIC Insurance

Before placing your money in any type of deposit account at a bank, make sure your account is insured by the Federal Deposit Insurance Corporation (FDIC).

If your bank is FDIC-insured, coverage is automatically applied to eligible contributions to your deposit accounts, including savings accounts, Account checking, CD And money market deposit account.

You are covered up to $250,000 per bank for each category of deposit account. In other words, you can deposit up to $250,000 in a high-yield savings account at one bank and an additional $100,000 in a high-yield savings account at a second bank, and the full amount will be insured. If you deposit $350,000 entirely in a single account, only up to $250,000 can be covered.

FDIC insurance protects your money against bank failure, and also covers the interest you earn on the account. If you’re considering a savings account with a credit union, you should make sure the financial institution you choose is insured by the National Credit Union Administration (NCUA), which provides similar coverage.

Explore different options and current rates that might work for your savings goals here

Lack of market volatility

Unlike investment accounts — which can gain or lose value depending on market fluctuations — high-yield savings accounts are deposit accounts.

The return you get on the principal balance held in your account may decrease over time, but you won’t be taking on as much risk.

One thing that can change over time with your high-yield savings account is the interest rate. These accounts earn variable interest rates that are linked to the federal funds rate. When the Federal Reserve decides to move its target federal funds rate range up or down, your High yield savings account interest rates can run side by side.

That means the rate you open your account with today may not earn you six months or a year from now. It could be higher or lower depending on what the Fed decides to do in the future. Your principal, however, will not be affected by market volatility.

Flexible access to your funds

If you are ever concerned about the security of your money or you need quick access Financial urgencyAnother advantage of a high-yield savings account is that you can usually withdraw your money at any time.

Other accounts often require a waiting period — whether it’s the expiration of a CD account or the qualifying withdrawal period for some long-term investment accounts.

As of 2020, the Fed has limited withdrawals or transfers to six per month from an account such as a high-yield savings account under Regulation D. suspended that rule indefinitely in 2020, but some banks and financial institutions may still enforce their own withdrawal limits. Make sure you read the fine print so you don’t get charged any fees for your withdrawals.

Learn more about flexible, competitive high-yield accounts you can open now.

Bottom line

High-yield savings accounts are one of the safest options available today to store your savings.

As long as you’re aware of all your personal account details and FDIC requirements — including deposits under $250,000 per bank and account type and changing interest rates — you can keep your money safe and benefit from a growing balance over time.