Here's Why Savings Accounts at Big Banks Aren't as Safe as You Think

Security is pretty important in a bank account. In fact, it's a top factor Americans look for when choosing a bank, according to recent banking research by The Motley Fool Ascent. A whopping 91% of respondents consider it an important feature, tied for No. 1 with quality customer service and mobile and online access.

If it's safety you're after, big banks may seem like the clear choice. Banks like Chase, Bank of America, and Wells Fargo are massive financial institutions, so it's reasonable to expect your money to be safe with them.

You're at almost zero risk of losing money you deposit with these banks. They're all FDIC insured, and that covers up to $250,000 per eligible account. But there is a different type of risk with accounts at big banks.

Rock-bottom rates that don't keep up with inflation

The largest banks pay the lowest interest rates. The average savings account rate is 0.47%, according to the FDIC. That's already not great -- some online banks pay over 10 times that.

But at big banks, it's even worse. Savings account rates at Chase, Bank of America, and Wells Fargo all start at a pitiful 0.01%. Have $10,000 in savings? Well, after a whole year using one of those banks, you'll have earned another $1.

The problem isn't just that you could earn much more interest with a different bank account. Your savings also won't even come close to keeping up with inflation. The long-term U.S. inflation rate is 3.28%. If your savings account only pays you 0.01%, then you're losing a lot more to inflation than you're earning in interest.

High-yield savings accounts offer more interest and the same level of protection

If you have your savings at a big bank right now, check out high-yield savings accounts. These are still savings accounts, but they're usually offered by online banks. As the name suggests, they offer significantly higher rates than what you'll find at most banks.

At the time of this writing, you can find rates as high as 5.36%. On a $10,000 balance, you could earn $536 in interest -- $535 more than what you'd earn at a bank offering 0.01%.

Even though some people see big banks as more secure, online banks are just as safe. They're typically FDIC insured, as well, so they offer the same coverage of up to $250,000 per eligible account. You can confirm that an online bank is FDIC insured on its website or through the FDIC.

Another good option is a certificate of deposit (CD). This type of account has a fixed interest rate and term, so you can lock in a rate for a set amount of time. With savings accounts, rates can fluctuate. The best CDs also pay rates similar to, and sometimes surpassing the best savings accounts.

For long-term growth, investing is the best option

A high-yield savings account is perfect for savings you might need in the near future. It's the right place for your emergency fund and any upcoming savings goals, such as a down payment on a home.

But for long-term financial goals, you're better off investing your money. Historically, the stock market has returned an average of about 10% per year. That's a much greater return than you could get through a savings account or CD.

As a general rule, if you're saving for a goal that's more than five years away, you should probably invest your money. If it's 10 years or more in the future, you should definitely invest your money. Two of the most common examples are saving for retirement and for children's college education.

Because of inflation, our savings gradually gets less valuable. The best way to protect against that is by putting your money in places where it can grow. There are lots of savings accounts that are beating inflation right now, but you won't find them at the big banks.