It’s easy to think the big financial moves like investing in the stock market, buying a home, or starting a business are some of the most important decisions you’ll ever make. And they likely are.
But one of the highest-return financial moves you can make takes about five minutes and requires almost no risk.
It’s also something that can pay you back every year for the rest of your life.
Why most savings accounts barely pay you anything
The national average savings account rate is currently 0.39%. And most of the savings accounts at the big, traditional banks like Chase and Wells Fargo only pay 0.01% APY.
That means if you keep $10,000 in a typical savings account:
- At 0.01%, you earn about $1 per year
- At 0.39%, you earn about $39 per year
Either way, your money is essentially sitting still. And that’s exactly what most people unknowingly accept.
What happens when you switch to a high-yield savings account
Many online banks currently offer high-yield savings accounts with rates around 4.00% APY.
That same $10,000 suddenly looks very different:
- At 4.00%, you earn about $400 per year
The money is the same. The account type is the same. Only the interest rate changes. Yet the difference can be 10x or even 400x more income from your savings.
Why this move pays you back forever
You likely only have to make this decision once. Once your savings are in a high-yield account:
- Every dollar you save in the future earns more.
- Your emergency fund earns more.
- Your short-term savings earn more.
- Your idle cash earns more.
Let’s say you keep an average of $20,000 in savings over time.
- At 0.40%, you earn about $80 per year
- At 4.00%, you earn about $800 per year
That’s $720 more every year.
Over 30 years, that’s tens of thousands of more dollars in additional interest just by using a better savings account.
Why so many people never make this change
The biggest reason people don’t open new, better savings accounts is because it feels like a giant pain in the neck. Once people open their first savings account, they rarely revisit it. It feels safe, it’s easy to forget about, and banks know all this.
It’s one reason many of the biggest banks still offer some of the lowest savings rates in the country.
But the opportunity cost quietly grows every year, and you can generally open a new high-yield savings account and transfer your money in minutes.
