My uncle has been retired for about a decade. He’s smart and lives well off his investments. But one of his money habits drives me nuts.

He keeps between $100,000 to $200,000 in a checking account at any given time, just sitting there as future “spending money.” And it earns zero interest.

I don’t say anything (I’ve learned not to mix family and money advice), but it hurts watching him miss out on thousands every year in potential interest.

If you are retired and holding a large cash pile, don’t let it sit idle like my uncle. Here’s why a high-yield savings account (HYSA) is a smarter place for your money.

What makes high-yield savings accounts better?

High-yield savings accounts are just like other bank accounts you’ve always used — only they pay way more interest.

Most HYSAs are offered by online banks, which save money by skipping physical branches and having streamlined operations. Those savings are passed on to customers in the form of higher rates.

Most online HYSAs offer:

  • FDIC insurance (up to $250,000 per depositor, per bank)
  • Most come with no monthly fees
  • Transfers in and out are fast and easy
  • You can automate deposits to simplify your cash flow

For retirees living off investment income, required minimum distributions (RMDs), or part-time earnings, an HYSA is a great place to hold cash between withdrawals.

How much interest could you earn?

Top HYSAs today are paying around 4.00% APY. That’s a huge jump compared to the average checking account rate of just 0.07% (or worse, 0.01% at many big banks!)

Here’s what that interest looks like after one year:

Savings Balance

Annual Interest

$10,000

$400

$25,000

$1,000

$50,000

$2,000

$100,000

$4,000

Data source: Author’s calculations.

Not bad for a zero-risk move that takes five minutes to set up.

Why now is the perfect time to make the switch

Honestly, any time is a good time to earn more on your savings.

But, given that interest rates might be cut here shortly in 2025, the awesome APYs we’ve been enjoying for years could start to fade out.

Here’s why now is a great time to move your cash to an HYSA:

  • Rates are still high. We’re in a sweet spot where many HYSAs are offering rates near or around 4.00% APY. That’s an awesome rate for a risk-free account!
  • Inflation is still a concern. Earning more interest helps your money stay ahead of rising costs.
  • No fees = more money for you. Unlike traditional banks, most HYSAs skip the annoying monthly charges.

There’s not much to lose with an HYSA… but a whole lot to gain. Even for folks who aren’t retired and hanging onto a lot of cash, it’s a great account to let your money grow passively over time. In fact, I personally earned almost $800 in interest last year with my HYSA.

Your cash deserves better

You don’t have to ditch your current checking account or leave your bank completely. You can still use it for daily spending.

But opening a separate HYSA just for storing extra cash can help you earn a whole lot more. It could mean hundreds — or even thousands — in extra interest over the course of a year.

So go ahead. Give your savings a well-deserved raise. Compare the top HYSAs today and open one that fits your goals.

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