The high-yield savings account is the default vehicle for a household's reserve. Yields track the Fed funds rate with a small lag. Any household still holding its reserve in a 0.01% legacy savings account is leaving money on the table for no reason.
- 01Identify a competitive high-yield savings account.
- 02Compare APY, minimums, and access to the operating account.
- 03Move a reserve into a high-yield account without disrupting cash flow.
What competitive means
In an environment where the Fed funds rate is 4–5%, a competitive high-yield savings account pays between 4% and 5%. The gap between the best and the worst is not thirty basis points; it is four percentage points. On a $30,000 reserve, that gap is $1,200 a year.
The mechanics
Open the account online. Link it to your operating checking account. Set an automatic monthly transfer from checking to reserve. Two-to-three-business-day standard transfer, one-day if you use the reserve bank's push transfer. That is the entire setup.
- Yield gap between the best and worst is a full four percentage points.
- One afternoon of setup, thirty years of benefit.