How are high-yield savings accounts different from savings accounts? One earns you about 17 times more on your money

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• High-yield savings accounts and standard savings accounts are both federally regulated and liquid.
• The main difference is that high-yield savings accounts can earn around 17 times more in interest.
• Some of the most competitive high-yield savings accounts are offered by online banks. 

A savings account is a good place to save money for short-term goals like a down payment, car, vacation, or emergency fund.

But a high-yield savings account will likely be a stronger choice for storing your money than a traditional savings account. We'll explain how these two types of accounts compare so you can understand how to distinguish them from one another.

Savings accounts similarities

High-yield savings accounts are essentially the same as any other savings account; both types of accounts:

• Are structurally pretty similar
• Are regulated similarly and FDIC-insured
• Limit withdrawals to six times a month, per federal mandate (this requirement has been amended so banks can choose whether to enforce the monthly limit or waive it)
• Can be used for short-term savings goals

High-yield savings accounts are just as liquid as any other savings account, and they're not invested, making them a good place to put any savings that you want to grow but will need in the next few years. Experts recommend against investing cash you know you'll need within the next five years, as you won't have time to recoup your investment after any market downturn.

High-yield savings accounts could help your emergency fund grow, while still being accessible if you need it in a pinch. They're perfect for a large balance like down payment savings that you want to grow risk-free.

Compare savings rates

Savings accounts differences

High-yield savings accounts are designed to make your money work in a way typical savings can't.

In the grand scheme of things, high-yield savings don't earn that much interest — right now, rates are at 3.60% APY or less. However, the average savings rate in the US is just FDIC National Deposit Savings Rates, according to the FDIC. Hence, traditional accounts earn so little that high-yield earns around 13 to 17 times more interest than with the typical savings account. 

Comparatively, high-yield savings accounts aim much higher, with many offering 2.75% to 3.60% APY. That's a percentage that can easily boost your savings, especially over the course of several years. 

For example, if you had a $10,000 emergency fund and transferred it into a high-yield savings account with 3% interest, compounding daily for five years, you'd earn about $1,618 in interest alone. Leave it for 10 years, and that $10,000 would grow to around $13,498. 

Back in a regular account earning .05% interest, that same $10,000 would have only earned $50.82 over 10 years. 

It's worth noting that savings account rates change with the federal funds rate. When the Federal Reserve cuts or raises interest rates, the rates can change, going up or down. But even if rates are low, it's still worth saving to build the habit and keep adding to your balance. 

There are lots of high-yield savings accounts to choose from, with some of the best choices from online banks and banking services like UFB Direct, LendingClub, and Bask Bank. Opening one is simple, and can even be done right from your phone. 

The main difference between the typical savings account and a high-yield savings account is how much more your account will grow.