The 'High-Yield Lazy Account': This Set-It-and-Forget-It Move Can Help Boost Your Savings

Building long-term wealth requires saving and investing. While it’s important to put some of your money in investments that have the potential to generate high returns, you should also keep some cash on hand to cover emergencies and short-term needs and wants.

But that cash doesn’t have to sit idly in a low-interest traditional savings account. A high-yield savings account (HYSA) lets your money grow while still keeping it easily accessible.

What a ‘high-yield lazy account’ actually is

HYSAs offer higher annual percentage yields (APYs) than traditional savings accounts. Many are currently offering APYs around 4%. They are protected like traditional savings accounts for up to $250,000 per depositor and per bank for each ownership category, as long as the bank or credit union is insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). They often come with low or no fees, and are easy to maintain — hence the “lazy” nickname here.

You can open a HYSA and enable automatic transfers from your checking account so you don’t even have to think about obtaining that extra yield.

Why it beats what many savers are doing

HYSAs generally don’t come with added risks compared to traditional savings accounts, so there’s essentially no downside to storing your money in them and getting a higher APY.

Let’s compare storing $10,000 in a traditional savings account offering 0.38% APY and in a HYSA offering 4%. In the traditional savings account, you’d generate just $38 of interest for the year. But in the HYSA, you’d get $400.

The only challenge with these accounts can be finding them, since your bank may not offer a HYSA. You’re more likely to find them with online banks that don’t have to pay to run brick-and-mortar stores. Read Money’s list of the best high-yield savings accounts that combine strong yields, low fees and reasonable minimums to get started.

How to set it up without overthinking it

When looking for a HYSA, you should narrow your focus on accounts with no monthly fees, a competitive APY, FDIC or NCUA insurance and no restrictive balance requirements. Once you set up this account, link it to your checking account so you can enable automatic transfers.

Although a high-yield savings account is a useful resource, it does not replace investing in long-term assets like stocks. And keep in mind that HYSAs have variable interest rates, so you can’t rely on the posted APY forever. Banks can lower APYs at any time based on various factors, such as Federal Reserve rate changes.