Cash Sitting Around? Here's Where It Should Be
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Most big banks are still paying around 0.01% APY for checking and simple savings accounts. But some of today's top high-yield savings accounts (HYSAs) are paying closer to 4.00% APY right now.
On a $10,000 balance, that's the difference between earning $1 a year and earning $400 or more in interest.
Idle cash has a cost. Here's where to move it.
The real cost of leaving cash in a checking account
Most people keep more cash in checking than they need. It might feel safe and accessible, but checking accounts typically earn next-to-nothing in interest.
Meanwhile, top online high-yield savings accounts can offer up to 4.00% APY right now. Certificates of deposit (CDs) are not far behind -- but they do require locking up your cash for a set term.
Here's a quick look at what $10,000 earns over one year depending on where it sits:
| Where Your Cash Lives | Approx. APY | Interest Earnings |
|---|---|---|
| Big bank savings | 0.01% | ~$1 |
| High-yield savings account | 3.50%-4.00% | $350-$400 |
| 12-month CD | 3.50%-4.00% | $350-$400 |
It's important to note that high-yield savings accounts (and CDs) typically have the same FDIC protection as regular checking and savings accounts. So your money is protected up to $250,000 per depositor, per institution.
High-yield savings accounts -- the simplest upgrade you can make
A high-yield savings account works exactly like a regular savings account. It's FDIC-insured up to $250,000. You can withdraw whenever you want. There's no investing or market risk involved.
The main difference is online banks and fintechs have lower overhead than traditional banks with large branch networks. And they pass those savings to you in the form of a higher interest rate.
Most of the top HYSAs today have no monthly fees and no minimum balance requirements. Opening one takes about 10 minutes online.
Personally, I keep all my cash savings in a LendingClub LevelUp Savings account. I currently earn 4.00% APY with $250+ in monthly deposits.
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LendingClub LevelUp Savings
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- Competitive APY
- No fees
- Easy ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- Requires you to make monthly deposits to earn the best APY
- ACH outbound transfers limited to $10,000 per day for some accounts
- No branch access; online only
The LendingClub LevelUp Savings account has a lot to offer. At the top of the list is its high APY, though you must deposit monthly to earn the best rate. Next is zero account fees, a strong and straightforward perk. Finally, you get a free ATM card, which you can use to withdraw from thousands of ATMs nationwide. Interested? You can open an account with $0.
When a CD or money market account makes sense
HYSAs are the right call for most people. But two other options are worth knowing about.
Certificates of deposit are offering similar APYs right now, and rates are guaranteed in exchange for locking your money up for a set term (3 months, 12 months, 2 years, etc.). If you have cash you genuinely won't need for a while, one of today's top paying CDs can squeeze out a little more return. Just know that withdrawing early usually comes with a penalty.
Money market accounts (MMAs) sit somewhere between a checking and savings account. They sometimes offer higher rates than traditional savings, often come with debit card or check-writing access, and tend to have higher minimum balance requirements. Money market accounts are worth a look if you want a little more flexibility alongside a decent rate.
What to do right now
If you've got cash sitting in a low-yield account, transferring it to a high-yield savings account is the lowest-effort financial upgrade available. There's no risk, no downside, and you can set up an account in 10-15 minutes.
No matter what type of account you choose, just make sure you're not leaving free money on the table. A better rate is out there -- and it's easier to get than most people think.
Find the best HYSA rates available today from FDIC-insured banks.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.
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