What Are the Pros and Cons of High-Yield Savings Accounts? What Are the Pros and Cons of High-Yield Savings Accounts?
High-yield savings accounts are a common type of account offered by many banks and credit unions that help consumers grow their savings with higher interest rates than traditional savings accounts. While they are a great way to maximize your hard-earned savings, it's important to consider the pros and cons before opening one. We'll dive into both the advantages and disadvantages of high-yield savings accounts below.
What Are High-Yield Savings Accounts?
As mentioned above, high-yield savings accounts are similar to traditional savings accounts with the main difference being they come with a significantly higher return on investment. The other notable difference between high-yield savings accounts and standard savings accounts is that high-yield accounts have compounded interest, meaning you'll earn interest on your initial deposit plus your previously earned interest. This is just another way that high-yield savings accounts help you grow your savings at a faster rate than traditional savings accounts.
What are the Pros of High-Yield Savings Accounts?
We've already covered a few of the advantages of opening a high yield savings account, and we'll dive into all of the positive features high-yield savings accounts offer below.:
Higher Interest Rates
According to the Federal Deposit Insurance Corporation (FDIC), the national average saving account rate in June 2025 is 0.28% Annual Percentage Yield (APY). Most financial institutions offer notably higher APY with high-yield savings accounts. For instance, Leader Bank's Zeugma Plus Savings currently offers 4.75% APY* on balances up to $250,000, which is more than 10 times greater than the national average.
FDIC Insurance
High-yield savings accounts are insured by the FDIC up to an aggregate amount of $250,000 for all accounts held at one financial institution. Leader Bank proudly offers our clients maximized access to coverage beyond this limit through the IntraFi Cash Service network!
Low-Risk
Funds deposited into a high-yield savings account will only appreciate in value over time. While APY is variable with a high-yield savings account, meaning it can fluctuate based on external market factors, it will never be negative, and account holders can rest assured that you won't lose money on your initial deposited funds with a high-yield savings account.
Liquidity -- Easily Access Your Money
Along with great rates, high-yield savings accounts allow easy access to your funds whenever you need it. Some interest-bearing deposit accounts like Certificates of Deposit (CDs) offer high rates but require that you leave your deposited funds untouched for the duration of the account term. Most financial institutions will assess an early-withdrawal penalty for taking money out of a CD before the account reaches maturity. High-yield savings accounts aren't as restrictive when it comes to accessing your deposited funds -- if you need to make a withdrawal or transfer you'll be able to do so without incurring a penalty. Leader Bank's Zeugma Plus Savings account comes with an attached Zeugma Plus Checking account currently offering 1% cash back on debit card purchases** making it easy to withdraw funds when you need them and earn even more on your savings. Greater flexibility when it comes to accessing your funds makes high-yield savings accounts a great option for building an emergency fund because you'll be growing your savings with a great rate and can access them at the drop of a hat as financial needs arise.
Disadvantages of High-Yield Savings Accounts
While there are numerous positives associated with high-yield savings accounts, there are some drawbacks that are worth considering before you open one.
Variable Interest Rate and APY
Unlike Certificates of Deposit which have fixed interest rates, high-yield savings accounts have variable interest rates and APY meaning they can change at any time after you open your account. Financial institutions will often adjust high-yield savings rates in tandem with external market factors including changes to the federal funds rate by the Federal Reserve. This can be a good or a bad thing -- if the Fed hikes rates after you open a high-yield savings account, the interest rate and APY on your account will likely increase accordingly. On the flip side, if the Fed cuts rates after your open a high-yield savings account, your interest rate and APY will likely decrease accordingly. In determining whether a high-yield savings account is right for you, it might be worth taking some time to research the rate environment and whether rates are expected to rise or fall in the near future before opening your account.
Minimum Balance Requirements
Some banks have minimum balance requirements to open high-yield savings accounts and require you to maintain a minimum balance once you open your account. Meeting these requirements can be necessary to avoid fees or earn the highest possible APY. It's important to do your research and read all account requirements before you decide to open an account so you're not caught off guard down the line.
Not the Highest Return on Investment
While high-yield savings accounts usually offer higher interest rates than standard savings accounts, there are other accounts and investment vehicles that offer even higher return on investment. We've already mentioned one -- Certificates of Deposit commonly offer higher rates than high-yield savings accounts (the tradeoff being more restricted access to your funds). Higher-risk investments like stocks can also provide higher return on investment than high-yield savings accounts.
How to Open a High-Yield Savings Account
Ready to start maximizing your hard-earned savings while earning cash back on debit card purchases? The good news is that qualifying for Leader Bank's Zeugma Plus Checking and Savings accounts has never been easier, and opening an account can be done from anywhere in the U.S. in just a few minutes online!
*Annual Percentage Yield (APY) effective as of 4 December, 2025. To open a new Zeugma Plus account relationship, you must make a total initial deposit of $1,000.00 using funds drawn from outside Leader Bank. Your Zeugma Plus Accounts must each be funded with a minimum of $10.00, the minimum balance required to maintain eligibility. To receive the 4.75% APY quoted, you must fulfill the following 3 requirements for your Zeugma Plus Checking each month: (a) receive a minimum of $1,000 in direct deposits, (b) enroll in eStatements, and (c) have three (3) electronic withdrawal debit transactions posted and cleared (excluding internal transfers) (the 'Qualifying Criteria'). When you satisfy the Qualifying Criteria, then an APY of 4.75% shall be paid on Zeugma Plus Savings balances up to $250,000 in the following month. An APY of 2.50% will be paid on that portion of daily balances which exceed $250,000; your total APY for such balances will range from 2.50% to 4.75%, depending on total balance. If you do not meet the Qualifying Criteria in a month, you will be paid 2.50% APY on your entire balance in the following month. The APYs above are effective for accounts opened between 12/1/25 and 2/28/26 and shall not be changed for accounts opened in this timeframe until at least 5/31/26; thereafter APYs may vary. Limit one Zeugma Plus Checking and one Zeugma Plus Savings account per household; additional terms and conditions may apply.
