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Not all savings accounts are created equal – and most Americans have bad ones.
Nearly 70% of Americans have a savings account whose interest rate is less than 2%, according to a survey of 1,000 consumers by the Bankrate Personal Finance website. One in five consumers earn less than 1% of the annual percentage return (APY) on short-term savings and almost one in four said their savings account did not earn interest.
At the same time, only 14% of consumers reported that their savings accounts earned more than 2% of YPAs.
The national average interest rate for savings accounts is 0.09%, according to the Federal Deposit Insurance Corp. For money market accounts, the national average rate is slightly higher at 0.18%.
But finding a savings account that can earn more than 2% interest is not a difficult business. In fact, this could be as simple as opening an online savings account.
"You can and should get a competitive return on your savings," said Greg McBride, Chief Financial Analyst at Bankrate.
Read more: Why do T-Mobile companies in SoFi want to get into the bank?
Bankrate surveyed 57 financial institutions to find out the interest rates of 60 online savings and money market accounts insured by the federal government.
The vast majority of these accounts (87%) paid at least 2% of YPAs, the average interest rate being 2.18% and almost all of them (92%) were available at the national level.
Finding a savings account that can earn more than 2% interest is not a difficult business. In fact, this could be as simple as opening an online savings account.
Moving your money to an account that pays more interest will pay off. If you place $ 10,000 in a 2.25% APY savings account, some online savings accounts from institutions such as Goldman Sachs
GS -2.21%
and synchronization
SYF, -1.38%
To do this, you would earn $ 1,327 over 5 years.
For comparison, a consumer who places $ 10,000 in a savings account and earns the national average rate of 0.09% earns only $ 45 in interest over 5 years.
The good news: there is no major obstacle to entering these accounts. More than half of these online accounts had an opening deposit of less than $ 100 and 35% had no minimum deposit requirements.
Look also: 4 biggest mistakes that most people make with credit card rewards
In addition, many companies have begun offering new bank and bank accounts designed to earn interest rates above the standard interest rates of major banks, including the mobile phone company T-Mobile.
TMUS, -0.85%
robo advisor Wealthfront and SoFi student loan company.
One of the reasons why interest rates are lower: bank accounts are "sticky". More than a third of consumers told Bankrate that they had not opened an account online because they did not want to leave their current bank or because they wanted to have access to a bank account. local branch. One in four is concerned about account security.
However, online savings accounts can easily be linked to another account at a bank or credit union. And as long as the account is insured by the FDIC or the National Credit Union's Equity Insurance Fund, the money will be protected.
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