Is a high-yield savings account worth it in today's economy? Here's what savings experts think.
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If you want to earn more interest on your money, it could be time to open a high-yield savings account.
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While there are numerous interest-bearing deposit accounts for savers to consider, high-yield savings accounts have become a popular financial tool. These accounts are easy to open from the convenience of your own home, thanks to the wide variety of online banks that offer them. And unlike traditional savings accounts, high-yield savings accounts allow you to earn hefty returns on your savings.
Like other savings tools, though, the potential returns on high-yield savings accounts are largely dependent on the economic climate. These accounts were especially worth considering in recent years, as interest rates were high overall thanks to the fight against elevated inflation. When the Federal Reserve lowered the federal funds rate in late 2024 and early 2025, though, many high-yield savings account rates dropped in tandem. That, in turn, led to questions about whether it was really worth it to open this type of savings account.
Whether a high-yield savings account is ultimately worth it for you depends on a range of factors, including your savings goals and liquidity needs, so you'll need to weigh all the factors to determine whether opening one is the right move. But to help you decide, we spoke with savings experts to find out if these accounts are still worth it in today's economic climate.
Find out how to earn more with the right high-yield savings account now.
Is a high-yield savings account worth it in today's economy?
Here's what experts had to say about opening this type of savings account in this economy:
These accounts offer an opportunity to earn more
A high-yield savings account can help you earn considerably more than you would in a traditional savings account. Right now, the average traditional savings account rate is just 0.42%, which doesn't really equate to a meaningful return on your savings. High-yield savings accounts, on the other hand, typically have returns that are many times that.
"High-yield savings accounts do what most savings accounts don't: actually earn something, " says Ryan McLin, a CFP with Impact Wealth Group. "With rates often 10x higher than traditional savings accounts, they're ideal for emergency funds and cash reserves."
To give you an idea of how much better the earning potential is with a high-yield savings account, imagine you had $10,000 of savings to deposit. In a high-yield savings account with a 4% interest rate, you would earn more than $400 in the first year and more than $2,200 after five years. Meanwhile, you would earn about $211 in interest on $10,000 after five years in a traditional savings account with a 0.42% return.
According to McLin, these accounts are well-suited to short-term financial goals, such as the down payment on the home you're planning to buy in the next year or two. They're also the best place to house your emergency fund, thanks to the safety and liquidity they offer.
Explore your high-yield savings account options and get started today.
High-yield savings account rates remain high for now
Interest rates on high-yield savings accounts are variable, so they generally ebb and flow based on the Federal Reserve's federal funds rate and other economic conditions. When the Fed lowers rates, the rates on high-yield savings accounts typically also decline (and vice versa).
"After the Fed raised rates and then hit pause, we saw high-yield savings accounts hold steady with some of the best rates we've had in years," says Michael Rodriquez, a certified financial planner with Equanimity Wealth. "Online banks are still competing for deposits, which is keeping rates elevated for now. It's been a rare bright spot in a pretty uncertain economy."
Though rates may be a bit lower than they were throughout parts of 2023 and 2024 when the federal funds rate was higher, it's still possible to find high-yield savings account rates of 4% or more currently. Rates on these accounts vary from one bank to the next, though, so it's worth shopping around for one with a competitive return.
Of course, there's no guarantee high-yield savings account rates will remain high. If the Fed decreases the federal funds rate, you can expect high-yield savings account rates to dip. But even at their lowest rates, these accounts tend to offer more generous returns than traditional savings accounts.
High-yield savings accounts aren't a substitute for investing
While high-yield savings accounts are an excellent option for emergency savings and short-term financial goals, they aren't a suitable replacement for investing.
"Don't let interest earned in high-yield savings account replace what equity and even bond markets can offer over the long term," says McLin. "This account isn't for growing wealth but making sure accessible cash doesn't lose purchasing power over time."
According to the U.S. Securities and Exchange Commission, the stock market has an average historical return of about 10% per year. On the other hand, you'd be lucky to earn 5% in a high-yield savings account. This can make high-yield savings accounts less than ideal for things like your retirement savings, where the goal is growing wealth rather than just preserving it.
Your high-yield savings account should also be just one part of your overall financial plan. Generally speaking, you'd turn to stocks and other investments for your retirement and long-term savings and reserve your high-yield savings account for emergency and short-term savings.
You may want to consider CDs as an alternative
High-yield savings accounts are one option for short-term savings, but they aren't the only option. You may also consider certificates of deposit (CDs). CDs have set terms and fixed interest rates, so you're able to lock in today's high rates for the full CD term.
"Short-term CDs, those with maturities of under a year, offer more flexibility, while long-term CDs (one year or longer) typically provide higher interest rates in exchange for less liquidity," says Matt Hicks, VP of Deposit Products at First Tech Federal Credit Union. "However, with the current interest rate environment, consumers can still find short-term certificates with rates equal to or greater than those of their long-term counterparts."
Some banks offer more competitive rates on CDs than on high-yield savings accounts, which can make them a solid choice. However, CDs also require you to lock up your funds for the full term. If you do withdraw money early, you will generally face early withdrawal penalties.
The bottom line
High-yield savings accounts can still be worth it in today's economic climate, especially compared to traditional savings accounts. While rates are a bit lower than they were a year or two ago, high-yield savings accounts remain one of the best tools for your short-term and emergency savings.
Just make sure to think of a high-yield savings account as a part of your financial strategy instead of the entirety of it. When combined with other financial tools, though, high-yield savings accounts can help you meet your financial goals and preserve the value of your hard-earned savings.
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So Bob, some sobering stats there, but let's give us, uh, just please your overview of things that have happened recently, a lot of developments in the market, the economy, and technology ingeneral. Well, look, it's an incredibly exciting time in tech, right? I mean, we are transitions and developments happening at a pace that are just unheard of. I mean, I've been covering the tech industry as a tech industry analyst for 25 years, and, you know, we thought some of the early days of the cloud were fast moving and we thought some of the developments around, you know, smartphones when the iPhone hits were fast moving, that's like child's play compared to this. This stuff is moving at a pace that's, it's frankly unheard of and a lot of people are frankly are having a hard time adjusting to it, but the fact of the matter of course, comments like a 20% unemployment rate applies. They don't get your eye. But look, we're opening up some new opportunities and we're finally getting to the point where we're seeing technology actually show a sense of intelligence. I'm not talking about general intelligence and all that kind of stuff. I, I think we're a long way away from that, but we are seeing technology products and services that are genuinely doing things we're like, is really cool, right? I mean, when Siri and some of those early AI assistants came out, we all kind of hoped they would do something that's like the Flintstones. Well, that'sthe thing. You look at it now and you're like, oh my God, but that, that kind of planted the seed of this notion of, you know, a digital assistant or something that could actually help me and and be driven by technology. Now we're there and we're starting to I, I do think getting it really widely deployed in a way that average people can use and everything else is gonna take a while, but you know, all the pieces are being put into place. This is a multiyear decade long kind of transition, I think, um, and that has implications for the market has for tech companies who's gonna lead what, when, where, how all of those things aren't gonna of that, but the net net of it all is, I think it's a super exciting time and you know, obviously, you know, today we happen to be recording on ears. I looked at Jensen for my wardrobe. Yes, exactly. And, uh, you know, and everybody's excited about what, you know, what he and what the company is doing, not just for themselves, but, you know, one of the cool things about Nvidia is they are actually across the entire tech industry, uh, and that's important to bear in mind. I think that's why he and the company itself would get so much attention these days. uh, let me just get to our phrase of the day. This is hybrid AI, which is the rising model that splits workloads across public cloud, private infrastructure, and even the devices on your pocket or on your wrist. So it's about speed, privacy and unlocking these new use cases. So I, I think public awareness right now of AI in general is pretty low. So when we talk about hybrid, that's just a layer, another layer of obscurity here, but tell us about what it means to you. Yeah, no, I mean, so the idea with hybrid AI is obviously we have these tremendous resources in the cloud with, you know, chat GPT and all the other things and all these big models that are running primarily in the we've also seen a number of companies start to say, you know, actually I'd like to do some of that, but with my own data, and oh by the way, not all of my data is in the cloud despite, you know, common misperceptions that that's the case. And then finally on top of that, of course, we have PCs and smartphones and wearables, uh, and I was just on a, you know, I was on a briefing this morning with AM they're talking about how AI is coming into the car as well. So, and all of these things are of running some of this AI work, but you don't want to have everything dependent on the cloud because first of all, that means all the data has to go to the cloud and and there's a lot of cloud goes down sometimes it does go down theydo and you know, and that's why in a car you could never do that. A car has to be, you know, autonomous on its own and then occasionally hit the cloud for information or updates and and certain capabilities. Uh, so think of that scenario, but then apply it to things like a PC as well, a again, companies, I mean, there have been various studies put out by some of the big, uh, market research firms that 50, 60%, as much as 70% of a corporation's data still lives behind the firewall that is in their data center or in a private cloud somewhere there's there's been this concept for a long time what's called data gravity, which means I want to do the work where the data resides, uh, especially because moving data into and out of the cloud costs money and time and, and lots of issues. So what companies are recognizing is, hey, my data my most important data is the stuff I keep behind the firewall, and I wanna be able to use uh these GPU servers uh on my own data and create my own applications. 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There's also privacy implications around that, all kinds of other things, which I'm sure Apple is gonna want to talk about a lot, by the but the net net of all of this is that's why I think hybrid AI is so important. If you look at a combination of where companies have their data, uh, what sort of computing resources are available, the logistical and power requirements of, of the buildout of AI data centers as we see them now, all of those things in my mind point to the fact that we're gonna have to figure out something, uh, to make it work, and that's what I think hybrid AI is. So that's interesting. So with the emergence of how do you trade that beyond just big tech? Are there certain industries that could benefit from that? I mean, you mentioned water too, so not just utilities, water, yeah, I mean, I mean, look, all these things, you know, I mean, obviously I'm sure you guys have talked about in the past. 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So honestly, I think some of the more traditional industries, not necessarily the tech industries, but maybe, you know, transportation or other places that you wouldn't normally think of, it's not gonna be right away, but I, I would imagine that companies like that are gonna be interested in saying, hey, we want to do some of this on our own, maybe food, you know, the food manufacturing industry. I, I don't know, right? It's likeeverything is ripe for disruption and that's just gonna create its own some industries are going to go first, and ironically I think AI researchers are the first to go, um, at least the the lower and mid-level ones, but it's gonna affect everything and then it's just a function of finding those pockets that haven't been disrupted yet. Um, I mean, I got to think like masseuses are always going to be in demand, human masseuses, uh, and I'm not, I'm not kidding there. They're gonna be, there's gonna be a demand for a certain amount of human interaction, but we're gonna talk about the job market after the break, but just thinking about the So what are the plays in AI right now? Because it looks like the Nvidia and we don't know what's gonna happen this afternoon, but that trade, the AI trade looks a little bit long in the tooth. Uh, it's gonna go through cycles here. Maybe there's gonna be some bumps in the road. What do you like right now? Well, look, I mean, I, I think there are, I think all the cloud, big cloud guys are gonna play an incredibly important role. They've continued, you know, your Googles, your Amazons, your, uh, uh, Microsoft's, uh, the metas. Yeah, and oh by the way, the other interesting thing that's going on with those guys is they're all as much as they love Nvidia and are buying a lot of Nvidia chips, they also like, I don't wanna be completely dependent upon those guys, so they're starting to build their own chips. So there's starting to be an industry, uh, of people building their own chips and that's where the broadcoms of the world and some of these other companies that actually do some of that design work alongside of a Microsoft and Google and what have there's the, there's the companies like, you know, and Cadence happens to be, uh, they make, you know, the software that's used to design chips. I mean, there are, it's a very niche. There's cadence and synopsis basically are the two main players. There's also Siemens has a little bit of that business too, butThese are very, you know, they're not huge companies and they're very specialized, but it used to be they could only sell their tools to a Qualcomm and Nvidia and Intel and an AMD, you know, and pretty much it. Now they're selling it to a much broader array of people. Now does that mean it's gonna be a huge stockmen? I don't know, but in terms of a company that's interesting to watch, absolutely seeing things like that, um, I think those things are all gonna be important because, you know, one of the other things that I was talking to someone else earlier think that semiconductors are now this thing that people actually really care about is, I think great, but also kind of crazy as somebody who watched from the sidelines or, you know, not from, I mean, who was in the midst of watching all this stuff and realizing that the vast majority of the world had no idea what I'm like, oh yeah, it's a chip, like, yeah, OK, it's something inside my phone or whatever, now, everybody recognizes how important they are, how essential they are to so much of what's going on, and how, you know, who the companies are they're involved with doing all of this. And, and so anything related to all that, companies that build the manufacture the chips, people like a lamb research, um, you know, there are others as well. They're the guys who actually build those amazing machines, uh, yeah, you know, ASML obviously in, in, uh, in the Netherlands, um, those kinds of companies are also obviously very interesting to watch, uh, because, you know, they're, they're leading edge. All right, hold that thought, we need to take a short break, but coming up we are talking AI taking over jobs, plus a musically themed runway showdown that dials back the clock one century. Stay episode is brought to you by the number 20%. In a recent Axios article with Dario Emodi, CEO of Anthropic, he said to expect 10 to 20% unemployment in the US in the next 1 to 5 years. So it's something one of these other things you don't really hear that much about on the news, uh, from CEOs, not from how do we position ourselves through this revolution, which is just, it's like, uh, it's almost imminent. It's in our faces, but it's not widely known or seenyet. Well, you know, it's interesting because I ask this question all the time, you know, I, I have, I'm very fortunate in the, the work that I do. I'm interacting with CEOs of all kinds of different companies and, and, and other high level execs to, you know, talk about what some of these big trends are always the elephant in the room, right? I mean, it's the elephant in the room like, guys, OK, what is this gonna actually do? But there is, and there's a part of you that says, oh yeah, that's gonna happen. But then there's the other part that you realize people have been so slow to really adopt all of these things as a regular part of their day that it's, and oh by the way, no one is getting trained on this. I actually, I did a study last year and I just saw another study from the numbers happen to be the same. 55%.Of the people who were surveyed, and these were IT decision makers involved with AI applications at their companies, 55% said we don't train anybody on any of this AI stuff yet. Like, what? Like how so and, and the problem is every one of us, you know, we've heard about this idea of a prompt engineer being a new job in the AI world. Uh, I think is gonna, AI is gonna write their ownproblem. That's exactly right. That, that's exactly the point is, in reality, every single one of us needs to become a prompt engineer if we're really gonna leverage AI and yet how does that happen? Well, we have to be trained, you know, the systems have to be put into a place. I mean, even me, I, and I don't know about you guys, not, not to put you on the spot, but like, you know, this is what I do, and yet I find I have to occasionally force myself out of my old habits of how I, you know, respond to emails or do certain things or research because yes there are some better tools now, but I'm still getting used to integrating them into my normal day and I think that's true for most people. Um, they're still figuring this out and habits are really hard to change. Well, that, that's an interesting point because even anecdotally talking to friends looking at TikTok, Instagram, people are now going to chat GPT to get relationship advice, to get some free therapy sessions, things like becoming more part of the conversation that the zeitgeist of the time, but even when I use it, there are definitely limitations and you have to double check things. I'll ask it a question or say something to it, and it'll spit back former President Donald Trump, it's not registering that he is president once again. So can you dive deeper into some of the limitations that we have in this in this current moment in time and when you expect we could get to a point whereMaybe we can rely 100% on AI and maybe is that a risktoo? I think it's a huge risk, to be honest with you. I don't know that we ever there's some scary stuff out there. There's very scary stuff out there and look, I think it'sAnd, and this is one of the other challenges that I'm talking about that's gonna take time figuring out, uh, you know, how much trust we can put into these systems, uh, even as they improve is a, that's not an overnight decision, right? That's something you gotta kind of live with it and try it and see what happens and companies have to try it and they have to deploy it in a way with, you know, certain groups within the organization to say, hey, how is this working for you guys?And and how does this stuff uh play itself out but to your question specifically, I mean, look, we still need more explainability, right? It's still a black box. There's a bunch of this stuff. It's like OpenAI is not that open. How did it figure that out and how did it actually get there, you know, and there's obviously a lot of work that's being done to try and deal with this know, all the, you know, all the scariest stories like the, uh, the latest one, I can't, it was, I don't know if it was anthropic, it said, you know, Claude, yeah, that was likereally focused for 3 or 4 hours and it figured out, so it was given these, these emails, uh, and these were just a fake repository of emails and it ended ended up of the engineers who had an affair, and this was all false, but just to see where these things were, yeah, I mean, but, and so when you've got that kind of thing going on to your question, Ali, I mean, look, that stuff is gonna take a while to play itself out and even let's say it was solved still so much concern out there with regards to this stuff, and it's interesting, you know, I talked about surveys, um, whenever I do a survey and some of the surveys I've seen, I always ask people to provide a subjective commentary on AI and what have you. And there's percentage, you know, even in the people that I'm surveying who are this is like IT decision makers like this is their job who show that there's that fear out there and if you were to do a general population survey, walk around the streets in New York and ask people about it, I guarantee you it'd be probably 40 to 50% of the people would say, mm I don't know, right? So there's that psychological fear that's gonna take a very long time for people to get you know, I think again it's gonna be a question of how do we best integrate these things, you know, into how we do our work, how does it actually improve our lives and allow us to get more things done and, you know, we're not always gonna plan a weekend getaway. I love all those examples. Hey, let's watch how easy it is to plan, uh, you know, a 5 day vacation to XYZ fun doing that. No, I, I know. Well, first of all, there is that, um, like, yeah, some people actually like that. But second of all, it's like, OK, I did that, you know, once or twice this year. Then what about all the other time? Like, you know, like howcomfortable are you with integrating into your job and your personal life? Well, I mean, I think those are all, you know, some of the challenge that we face. And oh, by the way, and we're just at the cusp of agents. Wait till agents start kicking in, right? Because we're up till now it's been us inputting our own questions into the chat control of your computer, doing things on your behalf, sending emails, booking things. Agents start to do all that automatically. That gets very interesting. Hold that thought here because, uh, we're gonna stick with AI, and it is time now for our runway showdown this week. We are rewinding to the early 20th century where two musical minds were pushing the boundaries of form and function. First down the catwalk we have Gustav Mahler, monumental, expressive, and deeply architectural. 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I happen to like Stravinsky better personally, that's just my musical taste, but um, you know, look, there are elements, to be honest with you, and I hate to be copping out like this, but they both kind of work together because actually the notion of what the chilets are in terms of chip design where you bring together all these different elements together and you package of like a bespoke, all of that allows then these systems to to operate more efficiently and in fact, getting back to some of the comments I made earlier, people who are doing some of these custom accelerator, uh, chips like I said, the Googles and the uh Microsofts and the Amazons and what have of what they're doing is they're taking stock arm CPUs or an Intel or an AMD CPU combining it with their stuff. In fact, one of the things that Nvidia just introduced at uh CompuTex was this idea of opening up their uh NV and the link uh connection between their CPUs and the GPUs. They said, hey,As long as you have one side B Nvidia, we'll combine somebody else's uh like Qualcomm. I was just talking to the CEO of Qualcomm last night. They were talking about the fact they now have a CPU that will connect to an Invited they're gonna be one of the companies that does this. There'll be other arm-based providers as well. And so it's there, those chilet things come together to enable those bigger systems that are orchestrating and providing all the services. So I know it's not a direct answer, but we'll take it. And last one to you, yeah, I guess just to bring it back to the company we all love to talk about all the time, Nvidia is to be this AI godfather, so to speak, and has this been a long time coming? It has been a long time coming. I mean, I think part of the reason why Jensen gets so much credit is he foresaw this a long time ago and he built all the tools that he needed to do, right? The coda software he always talks about that was like 2011, yeah, I mean, exactly, all the chips, I mean, you know, I mean, remember, yeah, this.I started out making chips to make Doom play faster, right? I mean, that's it, and to see how far he's come with this and to recognize the enabling that Nvidia has done, that's why I think they have, you know, they're a very interesting player because, and by the way, Jensen is happy to sort of share that wealth, so to speak, you know, he's, I mean, there's enough to go around, there's enough to go like, hey, I'm, I love partnering with these guys and I love partnering with these guys and these guys and these guys and these guys, and all of it feeds into his ecosystem. Then he in turn provides other pieces that they can leverage. So, you know, it's very much of a nice community building upon each other. And that is 24minutes of stocks and translation right there. 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