High-yield savings accounts are one of the safest places you can put cash. Your deposited money is federally insured, which means a bank failure won't cost you a dollar. That said, there are two real risks worth understanding before you assume everything's fine.
Your Money Is FDIC Insured
FDIC insurance covers up to $250,000 per depositor, per bank. If your bank fails, the federal government guarantees your money — principal plus any interest earned. This protection has been in place since 1933 and has never failed depositors.
It applies to both traditional banks and online banks. Whether you're banking with a big national bank or a fintech offering 5% APY, FDIC coverage works the same way. You can verify any bank's membership at FDIC.gov before opening an account.
Quick Rule: Stay Under $250,000 Per Bank
If you have more than $250,000 to keep in savings, split it across multiple FDIC-insured banks rather than keeping it all in one place. Each institution covers you separately up to the limit.
The Inflation Risk
Here's the catch nobody talks about enough: if inflation runs at 6% and your HYSA pays 4.5%, you're losing purchasing power. Your account balance grows, but each dollar buys less than it did a year ago. That's a real form of loss, even if your balance never drops.
That said, it's even worse with a traditional savings account paying 0.01%. A HYSA at least gets you much closer to keeping pace with inflation. For most people, the alternative — keeping cash in a low-yield account or at home — is a worse outcome, not a better one.
Variable Rates Can Drop
HYSA rates aren't fixed. They're tied to the federal funds rate, which means when the Fed cuts rates, your APY follows within days or weeks. The 5%+ rates people enjoyed in 2023 and 2024 have already declined, and may not return anytime soon.
You won't lose money, but you might earn less than you planned. If rate stability matters to you, a CD can lock in your current rate for a fixed term. See our guide on CD laddering strategy for 2026 to understand how to combine fixed and flexible accounts.
Bottom Line
You can't lose your deposited money in an FDIC-insured HYSA — that's not how it works. What you can experience is a slow erosion of purchasing power if inflation outpaces your interest rate, plus rate fluctuations over time. Neither of those is unique to HYSAs; they're just features of keeping cash in any savings vehicle.
Compared to keeping cash at home or in a traditional bank account, a HYSA is genuinely one of the safest and most sensible places for your savings.