Not sure if the question makes sense, but effectively, everyone millennial is into HYSA accounts and every fin-fluencer recommends it. I explained the concept to my husband (e.g. 3%+ APY across most offerings with their own requirements) so we could move our 1 year of expenses into it and vaguely compete with inflation (for the most part).
He was confused if we were investing the money, like you do in a money market mutual funds* account, which is all risk and no guarantees (my perception of investing; it makes me anxious*). He didn't understand how or why banks who are diversified, have more capital, and lend more, don't offer competitive APYs if it's so simple and "less risky" to the client.
Are they greedier? Are these new non-brick and mortar institutions genuinely altruistic and cutting overhead to afford to give you more back while they still make money on your money?
I do believe all legitimate options are still FDIC insured, but I couldn't explain the mechanism for why non-traditional banks gave more money back. Help appreciated for - idk- guidance? Assurance?
Thank you!
EDIT: Read an article from ConsumerFinance and there's a "money market account" and a "money market mutual funds account" - one is savings, one is investing: I was conflating those. I edited the body to reflect new knowledge.