2 Times a Regular Savings Account Might Be a Better Option Than a HYSA -- Despite the Low APY

When you're saving money, the interest rate is everything. It's the key to getting ahead as you work toward building your dream life. So it would make sense that you might think a high-yield savings account (HYSA) is always going to be better for you than a traditional savings account, which typically has a much lower interest rate. But that isn't always the best option.

Here are two times when you might actually want to go with a traditional savings account over an HYSA.

1. You're just starting to save money

If you don't already have some money stashed away that you want to transfer into a HYSA, you might not have the option to do that. Why? High-yield savings accounts often have steeper requirements to access them than traditional savings accounts do. In fact, you might have to have a certain minimum balance to open the account. This can vary, so you should shop around to find the best option for you.

Let's say a particular savings account requires at least $100 to open the account -- but you have to have at least $5,000 in the account to actually get the maximum APY. So if you only have $1,000 to put into that account, you'd only be eligible for the 0.25% APY, which would translate to earning just $2.50 per year (assuming you don't add to the balance over time.)

Our Picks for the Best High-Yield Savings Accounts of 2024

Capital One 360 Performance Savings APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.	Min. to earn $0
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of August 24, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of August 24, 2024	Min. to earn $1
UFB Portfolio Savings Account APY 5.15% Rate info To ensure you keep getting the highest rate at UFB, you'll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts. Min. to earn $0 Open Account for UFB Portfolio Savings Account On UFB's Secure Website. Member FDIC.	APY 5.15% Rate info To ensure you keep getting the highest rate at UFB, you'll need to keep an eye on their rates. Occasionally, the bank launches new accounts with higher rates. Existing accounts need to contact the bank to request being moved to one of these new accounts.	Min. to earn $0

For reference, that average traditional savings account earns 0.45% APY, which would come to $4.50 per year in interest. Either way, you're not earning a lot. But you'd still be earning less with the HYSA due to the balance requirement.

This isn't to say that you can't find $0 opening balance HYSAs. However, your options may be more limited and you might not get all of the features that you want. If you find that you don't have enough spare cash to open the HYSA you want or earn the high APY, you might want to hold off until you save up more money. In the meantime, a traditional savings account is still a useful tool to get you to that threshold.

2. You value an in-person banking experience

Most HYSAs are available from online banks. That means you won't be able to go in and talk to someone about your finances or account, if that's your preferred method of communication. That can be a deal-breaker for some.

In that case, you might want to look into traditional savings accounts that are available from brick-and-mortar banks. And you likely want to prioritize banks that have branches within your area to make sure that you can get the exact type of support you need. That way, you'll be better able to build a relationship with that bank, which may lead to better financial opportunities in the future, like loans or access to different accounts.

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Although earning a high APY can be a great way to help you make progress on financial goals, it isn't everything. So if the account that comes with that high APY doesn't meet your needs, or it has requirements that you can't yet meet, sticking with a regular savings account can be a great alternative.