This Is How Much Money You're Losing by Keeping $10K in a Regular Checking Account
KEY POINTS
- The simple act of moving your money from checking to another account could earn you hundreds (or thousands) of dollars each year.
- If you're worried about risking your money, there are several great FDIC-insured options available.
- If you want to retain easy access to your money, look no further than a high-yield savings account or money market account.
While they do exist, it's the rare checking account that pays interest on your money. And among those rare unicorn accounts that do pay interest, it's typically a pathetically low rate. That's why it's so important to keep an eye on how much is sitting in your checking account. Simply put, if you have a chunk of change lingering in checking, you're missing out on a great chance for free money.
For example, here are three FDIC-insured account types that make earning interest easy.
High-yield savings accounts
The silver lining of rising interest rates is that banks currently pay more for the honor of keeping your money safe and warm in a high-yield savings account. For example, CIT Platinum Savings is paying a sweet 4.55% APY for balances of $5,000 or more.
Let's say you want to keep a bit of a cushion in your checking account, so you move $8,000 to CIT Platinum Savings. And for the sake of illustration, let's assume that CIT's high-yield savings account rate doesn't change over the next 12 months. Rather than earn zippo in a checking account, you would earn $404 over the course of the year. That's money in your pocket for doing nothing.
Our Picks for the Best High-Yield Savings Accounts of 2024
| Product | APY | Min. to Earn | |
American Express® High Yield Savings
Member FDIC.
APY
3.90%
Rate info
3.90% annual percentage yield as of December 13, 2024. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.90%
Rate info
3.90% annual percentage yield as of December 13, 2024. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
Western Alliance Bank High-Yield Savings Premier
Member FDIC.
APY
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn
$500 to open, $0.01 for max APY
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
|
$500 to open, $0.01 for max APY
|
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
You didn't even have to take a risk. Like most savings accounts, the CIT Platinum Savings account is FDIC insured for up to $250,000, per depositor.
Money market account
Another option is to move the funds into a money market account (MMA). If you're not familiar with MMAs, here a quick rundown:
- MMAs are interest-bearing deposit accounts that typically combine features of savings accounts and checking accounts.
- You'll find that MMAs are a great place to stash money that you're saving for a specific purpose, like a wedding or new car.
- Normally, an MMA requires a larger deposit than a standard savings account.
- An MMA can include checks and debit cards that allow ATM access.
- MMAs may limit some monthly transactions, like the number of checks you write or transfers from one account to another.
- MMAs are FDIC insured for up to $250,000 per depositor, per FDIC-insured bank, per ownership category (that's just a fancy way of saying your money is 100% safe as long as there's less than $250,000 in the account).
If you're looking for an MMA that earns money while you sleep, look no further than Redneck Bank (yes, it's an honest-to-goodness bank). The bank is currently paying an APY of 5.05% on deposits up to $100,000. And if you can stand one more cool feature of Redneck's MMA, there's no minimum balance required.
Like the CIT Bank high-yield savings account, putting money in a Redneck Bank MMA means an $8,000 deposit will be worth $8,404 in 12 months. Again, it's an example of putting your money to work for you.
Quick note about Redneck Bank: Remember a few moments ago when I called interest-bearing checking accounts "unicorns?" Redneck Bank is one of the few financial institutions I've run across that pays a truly respectable rate on checking. If you were to open an account today, you would earn 5.30% on up to $15,000 in deposits. For a bank with a funny name, it sure offers a serious APY.
Certificate of deposit (CD)
In a nutshell, here's how a CD works:
- You deposit a fixed amount of money for a fixed period of time. For example, 3 months, 6 months, 12 months, etc.
- As long as you leave the money alone during that time, you earn the full promised APY on your CD account. If you withdraw money before it matures, you'll lose a portion of the interest you would have earned.
If you were to open a 12-month Western Alliance Bank CD CD, you could earn an APY of 4.25%. Not only is that 3.1 times higher than the national average, but it means that a $8,000 deposit would earn just shy of $441 over the course of those 12 months. Like the other accounts mentioned here, it's FDIC insured.
As someone who fights a life-long urge to keep far too much money in checking, I understand how hard it is to change the way you do things. However, as long as interest rates are high, I say we milk them for all they're worth.
Our Research Expert
Dana is a full-time personal finance writer, with more than two decades of experience. Her focus is on helping readers feel less alone as they navigate their personal finances and offering actionable insights.
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