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mkhrrs89 OP t1_jd40dj8 wrote

Reply to comment by [deleted] in ELI5: How do high yield savings accounts work? What is APR & APY, and how does compounding quarterly vs monthly vs yearly affect the amount earned? If you open one, how often are there payouts? by mkhrrs89

So why do regular savings accounts exist? Seems like it would just be smarter for everyone to always use high yield saving accounts?

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RodeoBob t1_jd42c5g wrote

High yield savings accounts tend to have more restrictions than regular savings accounts.

They often require a higher minimum balance, and allow fewer transactions per month. Going below the minimum balance may trigger a monthly fee, a lower rate, or both.

Savings accounts of any kind are a good option for mostly liquid savings that can be fairly quickly accessed. If you have a large amount of cash that you won't need right away, there are better investment options.

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mkhrrs89 OP t1_jd488vx wrote

interesting. Idk if what I have is considered "large" right now, but what would those better investment options be?

The only other things I have looked into are ETFs as pretty stable options and REITs that can pay out bigger dividends

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pineapple_and_olive t1_jd44gsw wrote

Aha because you're giving up something else in return. In finance there is no free lunch ever.

So what's the catch? Most typically these higher yield savings/deposits will lock out the money for a term (3/6/12 months), or the account requires a minimum balance or deposit, or the better rates only apply to non-local currencies, etc etc it's all up to the bank.

[edit] Credit pertains to debt. Taking out loans is when your credit score matters.

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