August 20, 2025

By: Anonymous 

Saving money is essential to meeting many of our financial goals, whether that be saving for a car, college tuition, or for a new phone. It might be tempting to simply save money as cash or to let it sit in a checking account, but there are many types of savings accounts specifically designed to help you save money while earning interest. Today we’re going to discuss two different types of savings accounts: traditional savings accounts, and high-yield savings accounts.

A traditional savings account is a commonly used savings account since it offers flexibility allowing you to add and withdraw money from the account at any time, but there may be a limit per month so be aware of that before withdrawing money. You cannot pay bills and checks directly from the account. This means that to make a payment you may need to transfer money from the savings account to a checking account. Additionally the interest rate on traditional savings accounts is usually between 1 - 2%, which is fairly low. 

A high-yield savings account (HYSA) is similar to a traditional savings account, they both allow you to add and withdraw from your account at any time (though there may be a monthly withdrawal limit depending on bank policies). Unlike the traditional savings account, HYSAs usually offer a higher interest rate, typically near 4-5%, helping your money grow faster. Most banks that offer HYSAs are only online, and have no physical location, which may be a drawback for those that prefer to go to a bank in person. 

Some key takeaways: Use a traditional savings account to save money you may need to use in the short term but don’t need immediately. HYSAs are also not suitable for long term savings, but they’re great for funds you may access in the upcoming 2-5 years. In the next part, we will discuss more about money market accounts and certificates of deposit.