What is a primary advantage of a high-yield savings account?

A primary advantage of a high-yield savings account is that it offers higher interest rates compared to traditional savings accounts. This feature allows individuals to earn more on their deposited funds over time, making it an attractive option for saving. The higher interest rates can significantly increase the overall returns on savings, especially when compounded over several months or years.

High-yield savings accounts are typically offered by online banks or financial institutions that can operate with lower overhead costs. This enables them to pass the savings on to customers in the form of better interest rates.

Other options do not represent the key advantage of high-yield accounts. For instance, while high-yield accounts often come with competitive withdrawal policies, "unlimited withdrawals without penalties" is not universally applicable as some accounts may impose certain restrictions. Liquidity does not imply low liquidity; instead, high-yield savings accounts generally maintain a good level of liquidity, allowing easy access to funds. Lastly, while funds in high-yield savings accounts are often insured against bank failures (typically up to a specific amount set by regulatory agencies), this insurance is common across various account types and is not unique to high-yield savings accounts.