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Why you should switch from a regular to a high-yield savings account

When it comes to earning interest, high-yield savings accounts easily surpass regular savings accounts. Getty Images

If you're like most people, chances are you have a savings account. Putting money aside for a rainy day or future purchase is one of the first money lessons many of us learn growing up. But if your savings are in a regular savings account, you could be missing out.

High-yield savings accounts, as their name implies, are similar to regular savings accounts in many ways. They earn interest based on the federal funds rate, they're protected by FDIC insurance and they allow you to separate money you shouldn't touch for a while from money you can use for daily expenses.

But when it comes to earning interest, high-yield accounts easily surpass regular ones. In this article, we'll explore why you should consider switching to a high-yield savings account today.

Check out current rates now to see how much more you could be earning.

Why you should switch from a regular to a high-yield savings account

Whether you're opening your first savings account or looking for a new one, here's why you should look into a high-yield savings account now.

You can earn considerably more

The biggest reason to switch to a high-yield savings account is how much more interest you can earn.

The average APY (annual percentage yield) for a regular savings account is 0.39% currently, according to the FDIC. High-yield savings accounts, by contrast, offer APYs around 3.5% to 4.5% (or higher). That's up to 12 times higher. Recently, the difference has been as much as 15 times higher. Over time, that can really add up.

"Most of my clients have been so used to getting a few dollars or cents in interest from their bank or credit union that the hundreds or even thousands they are able to get now can make a big difference," Dana J. Menard, CFP, RLP, CEPA, CDAA, recently told CBS News.

To find the best high-yield savings account for you, review current rates here.

You could secure better terms

Many high-yield savings accounts are offered by online banks, which don't have the overhead costs brick-and-mortar banks do. They often pass these savings onto the customer in the form of low (or no) fees and low (or no) minimum balance requirements. This can help you keep more of your money, which can then earn more interest.

"I believe right now is a great time to be a saver and get compensated for it," says Nick Covyeau, CFP and founder of Swell Financial. "Smaller banks are hurting for deposits after the collapse of SVB and are trying to entice new customers with more attractive high-yield savings options."

Your funds are easy to access

The best uses for a high-yield savings account are as an emergency fund or short-term savings vehicle. For an emergency fund in particular, it's important to have ready access to your funds whenever you need them.

"High-yield savings accounts typically offer easy access to funds, allowing consumers to withdraw their money quickly and efficiently when needed," says Ryan McCarty, CFP and lead adviser of Castle Rock Investment Company. "So not only are you able to earn money on cash just sitting around in your account, but you can use it for everyday expenses if needed. Things like money markets and CDs will require you to take extra steps or incur penalties in the case of a CD if you need the money quickly."

Ready to open a high-yield savings account? Start exploring your options here.

The bottom line

"Overall, a high-yield savings account is an excellent way for consumers to earn more on their money while keeping it safe and accessible," McCarty says. "I highly recommend that consumers consider opening one, particularly for emergency funds or short-term savings goals."

To find the best high-yield savings account for you, know what to look for and compare multiple banks. Whichever one you choose, you can rest easy knowing your savings are growing much faster than they would in a regular account.

"Your money is just sitting there; it makes sense to do more with it and put it to work," says Covyeau.

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