Is a high-yield savings account still worth it? Here's why it may be, according to experts.

In recent years, savers have earned exceptionally high yields thanks to a series of interest rate hikes designed to combat inflation. Yields have dipped slightly since September, when the Federal Reserve cut the federal funds rate for the first time in over four years, followed by rate cuts in November and December. Rates may decline further in 2025 if the Fed continues to cut rates as it has signaled.

Despite the recent drop, a high-yield savings account can be a safe option to earn interest on your money without committing to a long-term investment like a certificate of deposit (CD). 

With the possibility of interest rate cuts looming, it's logical to question whether the days of elevated yields are behind us and whether high-yield savings accounts are still worth it. Let's examine the question more closely.

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Yes, a high-yield savings account is still worth opening (and why)

If you're looking for a safe place to park your money and earn interest, it's still hard to beat a high-yield savings account. The best HYSAs are still offering APYs around 4%, roughly nine times more than the current average savings rate of 0.43%, which includes rates earned in regular savings accounts. Unlike CDs, which often charge penalties for early withdrawals, these accounts allow you to access funds when needed.

"HYSAs are absolutely still worth opening because they're easy to understand and offer more yield than a standard savings account," says Andrew Herzog, associate wealth advisor at The Watchman Group. 

"I would highly recommend consumers find a high-yield savings account to store their funds. More experienced investors could directly purchase Treasuries for a higher yield, but a HYSA is the easiest and most liquid option," Herzog says.

Cathleen Tobin, a CFP and financial planner at MoonBridge Financial Design, also recommends HYSAs for short-term savings goals. 

"High-yield savings accounts are still a good place to keep cash that the owner expects to use in the next six to 12 months. It's easy to forget that interest rates were close to zero just two years ago. Today, even after the rate cuts, high-yield savings accounts are still paying 4% or more in interest. Even if rates drift down over the coming months, the money in the account will be accessible and earn more than inflation," Tobin says.

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No, a high-yield savings account is not worth opening (and why)

While high-yield savings accounts are ideal in the short term, they may not be worth opening if you have a longer savings horizon. HYSAs have a variable interest rate, which could go down if the Fed continues to lower rates in 2025.

"A HYSA is the best place to park your funds for a goal in less than a year. However, if your goal timeframe is longer than a year, consider a CD if the interest rate offered is higher than that of the HYSA. Once your goal timeframe is beyond three to five years, consider other investing options such as bonds or less risky stocks," Jovan Johnson, a CFP and co-owner of Piece of Wealth Planning.

In the current rate environment, it might be advantageous to lock in a longer, fixed-rate CD for a term ranging from one to five years. By shopping for a top-yielding CD today, you may secure a yield of 4% or more and safeguard your savings against potential rate cuts.

"Something to keep in mind is that interest rates can decline, which may reduce your earning potential over time," says Melissa Murphy Pavone, founder of Mindful Financial Partners. "You must always take into consideration inflation. If the return on your high-yield savings is not outpacing inflation, your purchasing power is eroding — a.k.a. 'going broke safely.'"

Johnson adds that high-yield savings accounts may not be the best option for savers looking for maximum growth potential. 

"HYSA interest rates typically only keep pace with inflation. If your goal is to achieve gains that outpace inflation, you may need to explore more aggressive investment options," Johnson says.

Benefits of opening a high-yield savings account now

If you're considering opening a high-yield savings account, it may be advantageous to do so before rates potentially fall again. Keep in mind, however, that rate cuts aren't set in stone — there's still a chance they might go up instead.

The funds you stash in a high-yield savings account are always accessible, which is preferable if you anticipate needing the funds in the near future. A CD allows you to lock in today's rate for the long term, but you'll pay an early withdrawal penalty if you have to pull out funds before the CD matures.

The bottom line

You can still benefit from high rates by opening a high-yield savings account now, especially if you're saving for a short-term goal and need penalty-free access to your funds. If you're on a longer savings timeframe, you might turn to a CD, Treasury bills or other options that let you lock in a higher, guaranteed rate that isn't impacted by fluctuating interest rates. It's a good idea to consult your financial planner or tax advisor to choose the best account that fits your overall financial plan.