Here's What Most People Don't Know About Stashing Money in a Savings Account
A savings account might feel like a safe place to stash your money -- it's insured, easy to access, and low risk. But if it's not earning at least 4.00% right now, you're probably missing out on hundreds of dollars a year in lost interest.
I've been writing about personal finance for years, and this is hands down one of the most common (and expensive) mistakes people make with their money.
The truth about big-bank savings accounts
If your money is sitting in a traditional savings account at a major bank, there's a good chance you're earning just 0.01% APY. That's not a typo. For every $10,000 you have saved, that's about $1 per year in interest.
Meanwhile, plenty of FDIC-insured online banks are paying 4.00% or more right now. That's over $400 a year in interest on the same $10,000 just for switching where you keep your money.
Your money feels safe -- but it's shrinking
With inflation still hovering above 3%, earning 0.01% is basically moving backwards. Every dollar you leave in a low-yield account is quietly losing purchasing power.
High-yield savings accounts don't just boost your returns -- they help you stay closer to breaking even against rising prices. I love the CIT Platinum Savings account right now, where you can earn 4.00% APY for balances of $5,000 or more -- just click here to open an account.
You don't have to give up access
One of the biggest myths about high-yield savings accounts is that they're harder to use. But most online banks now offer same-day or next-day transfers, mobile apps, and no monthly fees. You still get 24/7 access to your cash -- just with a much better return.
Even better: your money stays FDIC insured, up to $250,000 per depositor.
The switch only takes minutes
Moving your savings to a high-yield account is one of the easiest financial wins out there. You don't have to change banks entirely: Just open the new account, transfer your emergency fund or extra cash, and start earning a rate that actually keeps up.
It only took me minutes to make the change. Start shopping for one of the best high-yield savings accounts here.
Don't let your money sit idle
Savings accounts are meant to keep your money safe, but that doesn't mean you should settle for pennies in interest. With rates still high and inflation eating away at your buying power, moving to a high-yield savings account is one of the smartest low-risk moves you can make right now.
It takes five minutes. It could earn you hundreds this year. And it keeps your cash flexible and secure. What are you waiting for?
Our Research Expert
Managing editor for Motley Fool Money. James has worked full-time for The Motley Fool since 2012. A longtime editor and former reporter, James oversees the production and quality of Motley Fool Money's editorial content.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.