2 Reasons Not to Open a High-Yield Savings Account -- and Why They're Wrong

When you work in personal finance, you read a lot about banks and bank accounts. Sometimes it's a little surprising to realize that other people don't get exposed to the same information as you.

For example, a lot of people don't know they can open a high-yield savings account (HYSA) that pays more than 4%, according to a banking survey by The Motley Fool Motley Fool Money. Earning a high rate on your savings is an easy way for an ordinary person to make passive income -- money for doing nothing other than keeping cash in the bank.

But even if you're aware of this fact, there are two myths about HYSAs that might be holding you back. Here's a closer look at those falsehoods (as cited in the survey) -- and why you should disregard them and open an HYSA as soon as you can.

1. "Opening a high-yield savings account takes too much effort."

I get it -- finding a new bank and opening new accounts can be a time suck. But don't let this stop you from opening a high-yield savings account.

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

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 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.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

For starters, the best options are offered by online-only banks, which means you won't have to leave your house or even put on shoes to open one. Once you've picked the right bank and account (we review banks here at Motley Fool Money, by the way), head to that bank's website. From there, you'll be prompted to enter your personal information and can have a new account in minutes.

You'll need to fund your new online HYSA, and that could take a little longer, but it still shouldn't be a hardship for you. The easiest option is to link an outside checking account and use it to transfer money to your HYSA. The money will usually show up within a few days, unless you use a payments app like Zelle (which works with over 2,000 banks).

If you want to get cash out, you can use this same linked bank account, or open a checking account alongside your HYSA and freely transfer cash that you can then access via ATM or a debit card. It's really quite easy -- and fast.

2. "Banks that offer high-yield savings accounts aren't trustworthy."

Plenty of problems exist within the world of finance. Not a day goes by when I don't get an email with a press release from the Consumer Financial Protection Bureau announcing legal action against a bank, credit card issuer, mortgage lender, or other financial institution. Many Americans have been the victim of predatory financial companies -- which is why protections are in place.

One of the biggest protections bank customers enjoy is FDIC insurance. The Federal Deposit Insurance Corporation is a government agency created in the wake of the run on banks after the great stock market crash of 1929 that was the catalyst for the Great Depression.

Bank with an FDIC member institution and you'll enjoy insurance on up to $250,000 of your money, per depositor, per FDIC-insured bank, per ownership category. And some banks partner with other banks to offer even greater protection.

If your FDIC-insured bank fails, your cash will be returned to you. So if the prospect of opening a high-yield savings account with a newfangled online-only bank makes you nervous, just make sure the one you're considering is an FDIC member. You can even double check with the FDIC itself -- its BankFind Suite tool lets you search for insured banks.

Don't let your fear of a hassle or untrustworthy banks stop you from opening a high-yield savings account. It's one of the best ways for an ordinary person to benefit from higher interest rates without risking money loss.