Are you looking to make the most of your money in a low-risk setting? A high-yield savings account could be a good option. With a high-yield savings account, your money earns more than in your standard savings account with your regular bank, and you aren’t at risk of losing what you put in the way you are when you invest in something like the stock market. However, there are some conditions and considerations you’ll have to think about before deciding if a high-yield savings account is right for you. Here are a few pros and cons to high-yield savings accounts so you can make an informed decision.

High-Yield Savings Account Pros

1. Earn More in Interest

The way a high-yield savings account works is it offers a higher interest rate than a traditional savings account. That means you earn more per dollar you put into the account. However, unlike at your regular bank, the interest rate is not fixed, so an amazing rate will likely fluctuate over time. That said, the rate will still be higher than if you kept your money in a traditional savings account. This also means that this kind of account is an excellent place to put a lump sum that you are hoping to save for a future event, like paying for college or home renovations.

2. Easy Access to Your Money

Unlike with many investment accounts, such as retirement accounts, you can access your money in a high-yield savings account whenever you want. You don’t need to wait a certain number of years or to be a certain age, and the money doesn’t need to be used for a particular designated thing. This makes it a great option if you are hoping to both grow your money and be able to actually use it whenever you need it.

3. Your Money is Protected

It can be easy to be skeptical of an online bank, which is where high-yield savings accounts are held, but these accounts are a safe and secure place to keep your money. Most of these accounts are FDIC insured up to $250,000, which means you won’t lose your money in a situation like a run on the bank. Even though you won’t be able to go into a physical bank and open an account that way, you can still feel confident about the safety of opening up a high-yield savings account online.

High-Yield Savings Account Cons

1. Delay in Accessing Money

While you can transfer or take out money whenever you want, there can be a delay in the transaction of up to a day or two. If you need an account where you have immediate access to your money, you might want to keep some funds in a more traditional savings account or a checking account.

2. Not Ideal for Retirement or Other Long-Term Growth

These accounts do earn you more interest over time than traditional savings accounts. However, they should be used in addition to–not instead of–retirement accounts and investments. You will not earn big money in the long term from a high-yield savings account. This is why we always recommend diversifying your portfolio. It’s wise to have some money in a traditional bank, some in a high-yield savings account (if you feel it’s the right decision for you), some in a retirement account, and some invested. This way, you make the most of every situation.

3. Withdrawal Limit

You can’t withdraw from a high-yield savings account more than a certain number of times per month before getting hit with a fee. This is not necessarily a problem if you don’t actively use this account, but if you feel you will need to move money around a lot, you need to make sure you have another account that allows you to do so.

At DeSantis, Kiefer, Shall, & Sarcone, our experts can help you decide if a high-yield savings account is right for you and your financial goals. We always look at the big picture of our clients’ goals, assets, and financial health to advise them on the best strategies for making the most of their finances.