Here's Why Keeping $50K in the Bank Could Be a Costly Mistake

Having $50,000 in the bank feels like a financial win -- and it is. It means you've built a strong savings cushion, and you've got options. But here's the part most people miss: Where you keep that money matters just as much as having it.

If that $50,000 is sitting in a traditional savings account earning 0.01%, you're likely losing hundreds or even thousands of dollars every year to inflation and missed opportunity. And in this rate environment, that's completely avoidable. The following four reasons demonstrate why it's such a bad idea.

1. You're probably earning next to nothing

The national average savings rate at brick-and-mortar banks is still around 0.01% to 0.05%. That means $50,000 in one of those accounts would earn maybe $5 to $25 per year in interest.

Meanwhile, some high-yield savings accounts are paying 4.00% or more right now in accounts that are fully FDIC insured and just as easy to access.

That same $50,000 in a top-paying HYSA? You're looking at $2,000+ in interest over the next few years without taking on any investment risk.

2. Your cash isn't keeping up with inflation

Inflation may be cooling, but it's still eating away at the value of idle cash. Even a modest 3% inflation rate means your $50,000 loses about $1,500 in purchasing power every year.

So while your balance might not change, what it can buy shrinks over time, unless you're earning a rate that keeps pace.

3. You don't have to invest it all, but make a plan

If that $50,000 is your emergency fund, great -- keep it accessible. But if even part of it is long-term savings, it's time to consider putting some of that money to work.

You can:

• Keep a chunk in a high-yield savings account for flexibility.
• Open a brokerage account and invest in a low-cost index fund.
• Use a retirement tool to see how reallocating that cash could impact your future.

Making these decisions can seem daunting. If you're looking for some guidance, a short questionnaire from our partner, SmartAsset, helps match you with up to three fiduciary financial advisors, each legally bound to work in your best interest.

4. The biggest mistake is doing nothing

A lot of people sit on big cash balances because it feels safe. And in some cases, it is. But it's also expensive. The longer you leave that money untouched in a low-rate account, the more it costs you in lost opportunity.

The good news is that fixing it is easy.

• Move your money to a high-yield savings account.
• Put your long-term dollars in a brokerage account or IRA.
• Use free tools to map out a plan and catch up fast.

Make that $50,000 work for you

You've already done the hard part: You saved the money. Now make it count. Even small moves today can pay off big down the road.

The worst place for your $50,000 is the one where it quietly loses value. Make it work smarter.