3 Unexpected Benefits of Opening a New Savings Account

Savings accounts are popular, and there's a good chance you already have one. If so, you might not have considered getting a new one. The main purpose of these accounts is to keep your money safe, after all. You don't exactly need more than one to do that. But before you rule it out, you should know about a few unexpected benefits of opening a new savings account.

1. You could earn over 10 times as much interest

No, that's not an exaggeration. The average savings account currently pays 0.47% a year, according to FDIC data. Some big banks don't even pay that much. For example, Bank of America and Chase have accounts that start at just 0.01%.

Several of the best high-yield savings accounts currently pay 4.75% or more. On a $10,000 balance, that's the difference between $475 a year in interest and $47.

High-yield savings accounts are mostly available through online banks, but they're just as safe as any other account. The most popular options have the standard FDIC insurance covering up to $250,000 per eligible account ($500,000 for joint accounts).

Even though these accounts pay much better, most people don't use them. Only 31% of Americans have a savings account with a rate of at least 4%, according to a savings account study by The Motley Fool Ascent.

2. It could motivate you to save more

Positive reinforcement can be a powerful tool. When you follow good financial habits, including saving and investing, it's easy to see the results over time. Those positive results can motivate you to keep going and to do even more.

That's especially true if you open a high-yield savings account. You'll be earning much more interest than you would with an average savings account, and those monthly interest payments are a great motivator.

If your savings is earning barely any interest, it doesn't exactly get you excited about saving money. If you're earning $10 to $100 a month in interest, you'll probably want to keep that going and keep adding to your balance.

3. It could help you organize your savings goals

Most of us have multiple savings goals. You might be saving up for:

• An emergency fund
• A down payment on a home
• A vacation
• An Apple Vision Pro (personally I'd rather buy this than a home)

It's hard to track your progress on different savings goals if you have all your money in the same place. Let's say you have $10,000 in savings. You'd have no easy way of knowing how much of that is for your emergency fund, your home fund, and so on.

An underrated way to improve at banking is to use sub-savings accounts. Some banks call these sub-accounts, and others call them savings buckets, but they work the same way. You can set these up within your main savings account to better organize your savings. For example, you can have a sub-account for your emergency fund, a travel fund, and anything else you're saving for. If your current bank doesn't have this feature, consider switching to one that does.

Most people stick with their savings accounts for a long time, and that's a good thing. It's not worthwhile to constantly change savings accounts. But if your account doesn't have a high APY, or it's missing useful features, then getting a new one could pay off.