The Terrible Banking Habit That Costs People the Most Every Year
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The big traditional banks, think Bank of America, Chase, Citi, Wells Fargo, tend to pay customers the lowest interest rates in the country.
At just 0.01% APY, those big banks pay around 400 times less what top high-yield savings accounts pay.
Leaving your savings in a traditional savings account is one of the most costly but easily fixable personal finance mistakes people make every year.
The math adds up faster than people realize
Say you keep $20,000 sitting in a regular savings account earning 0.05%.
That earns about $10 a year.
Put that same money in a competitive high-yield savings account earning around 4.00% and you are looking at roughly $800 a year.
That is a $790 difference. And it compounds every year.
Scale that up to $30,000 or $40,000, stretch it over five or 10 years, add inflation on top, and this habit quietly costs people thousands of dollars without ever triggering a warning sign.
Click here to compare the best high-yield savings accounts available and move your money in minutes.
Why smart people fall into this trap
People stick with the bank they opened in high school because it feels safe and moving money feels like work.
The can gets kicked down the road, years go by, and nothing ever changes. But those assumptions couldn't be further from the truth.
Opening a new high-yield savings account can be done in minutes completely online.
And reputable online banks are FDIC insured just like brick-and-mortar banks. Your money is protected up to the same limits.
And access is usually easier than people expect. Transfers are fast, some accounts come with debit cards, and you can still keep a small buffer in checking for day-to-day spending.
You do not have to move everything.
The real cost is opportunity
The most painful part of this habit is not what you lose this year. It's what you lose over time.
That idle cash could be earning interest. It could be offsetting inflation. It could be giving you a little more margin and flexibility without any extra work.
Instead, it sits still.
If you have not looked at where your savings live in a while, this is your nudge. A simple account change is often one of the highest-impact financial moves people can make in under an hour.
And it's one of the few money fixes that keeps paying you back every single year after. Compare some of the best accounts available here, and finally experience what it feels like for your money to make money.
Our Research Expert
Jake FitzGerald is a full-time Editorial Strategist and Personal Finance Writer at Motley Fool Money, leading content production and distribution while also writing about credit cards, bank accounts, and other financial products. He has more than a decade of experience editing and shaping financial content to give readers clear, trustworthy money advice. His work focuses on delivering practical insights that empower people to make smarter financial decisions. Off the clock, he’s a fan of college football tailgates and still loyal to his favorite putter -- despite what his short game suggests.