HYSA vs Cash Management

Within recent years, you may have seen or heard of something called a high-yield savings account, or HYSA. This is different from a typical savings account as it has a higher APY, or annual percentage yield. This means that while your typical savings account only gives you less than one percent interest each year, a high-yield savings account could give you up to 5% depending on who you open an account with. Comparatively, Cash Management accounts can also provide you with a high APY, but can be great for those with different needs, like investors. Which account type will work best for you?

The Benefits of a HYSA

The draw of a high-yield savings account is the interest rate. Unlike a traditional savings account, you'll see a significant difference in your balance in a short period of time depending on how much you have in the account. You can also transfer money in and out of your account multiple times a month without incurring any fees. For the most part, your HYSA will operate the same as your standard bank account, making it flexible and easy to use.

So, what's the catch? Just as anything does, high-yield savings accounts come with pros, cons, and risks. There is no fixed interest rate, so it's subject to change at any time based on market demands. This makes earnings from HYSAs unpredictable, and while you may be choosing the company offering the highest available interest rate now, it might not always be the case. Additionally, if you need to make a significant number of withdrawals each month, you may be charged a penalty. For this reason, it might best to use this account sparingly and only transfer money to your main account when absolutely necessary. It's also important to remember that your earnings count as income and need to be reported on your taxes.

Defining Cash Management

Despite their popularity, HYSAs aren't for everyone. For those looking for something else, some brokerage accounts allow you to opt-in for a Cash Management program. This type of account can be great for those who already have an active brokerage account and want to put their uninvested funds somewhere that can still generate interest. Some Cash Management accounts also provide more freedom and flexibility when it comes to making deposits and withdrawals, and you can use funds already accessible from your brokerage account.

The cons of Cash Management may include limited returns compared to other forms of investments and lack of direct insurance. It's important to keep these things in mind when considering whether or not a Cash Management account is right for you.

Cash Management with Webull

If you decide to opt-in for Cash Management with a Webull brokerage account, you can reap the benefits of one of the highest APY's currently on the market. This will allow you to earn on your uninvested cash faster than most other savings accounts. There are no fees and no minimum balance requirements for your cash management account, so you can opt-in to Cash Management with any amount without worry.

If you want to learn more about all our Cash Management program has to offer, check out our FAQs here or visit the Cash Management home page. Don't let your money go uninvested—have it work for you!

Disclaimer: Webull Financial LLC, Member SIPC, FINRA. Regulatory and other fees may apply. Webull is not a bank. Rates subject to change. More info www.webull.comdisclosures