HYSA Glossary
Plain-English definitions for every term you'll see on a savings account disclosure, with deeper explainers for the concepts that matter most.
In-depth articles
APY (Annual Percentage Yield)
The total interest you earn in a year, expressed as a percentage and including the effect of compounding. Required disclosure under the Truth in Savings Act.
FDIC Insurance
A federal government guarantee that protects your bank deposits up to $250,000 per depositor, per insured bank, per ownership category, in the event the bank fails.
Compound Interest
Interest that is earned not just on your original deposit, but also on the interest that has already been credited to your account.
High-Yield Savings Account (HYSA)
A savings account that pays an interest rate substantially higher than the national average — typically offered by online banks with lower overhead than brick-and-mortar institutions.
Truth in Savings Act
A 1991 federal law that requires depository institutions to disclose key terms — including APY, fees, and minimum balance requirements — in a uniform format so consumers can comparison-shop.
NCUA Insurance
The credit union equivalent of FDIC insurance: a federal guarantee from the National Credit Union Administration that protects member share accounts up to $250,000.
Liquidity
How quickly you can access your money without incurring fees, penalties, or losses. Cash in a savings account is highly liquid; cash in a 5-year CD is much less so.
Certificate of Deposit (CD)
A bank deposit account where you commit to leaving your money untouched for a fixed period (the term) in exchange for a guaranteed interest rate.
Quick definitions
- APR (Annual Percentage Rate)
- The simple interest rate quoted on an annual basis, before any compounding. Less useful than APY for comparing savings accounts.
- Savings Account
- A deposit account at a bank that pays interest on the balance and is intended for funds you do not need for daily transactions.
- Bank Failure
- The closing of a bank by its chartering authority. FDIC-insured deposits are protected up to the insurance limit and are typically made available to depositors within a few business days.
- Money Market Account
- A deposit account that combines features of a savings account and a checking account, typically with a slightly higher minimum balance and limited check-writing privileges.