Image source: Joel O’Leary
A few years ago, I switched banks and moved all my cash over to a high-yield savings account. Instead of earning 0.01% interest with my old checking account, I’ve been earning between 4.00% and 5.00% the past few years.
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And all that interest has all been piling up… This summer it crossed $2,000!
So I went and did something really immature. I found an old rusty ’89 Jeep Wrangler for sale and bought it for $2,000. Basically, my bank paid for this Jeep (well, that’s the story I told my wife to get her permission).
Here’s how I earned that much interest, and how you can too.
Why a high-yield savings account beats your regular bank
Most big bank savings accounts pay a tiny interest rate. In fact, right now the national average APY for savings accounts is 0.38% (checking accounts are way lower, at 0.07%)
Meanwhile, top high-yield savings accounts (like mine with Betterment) pay closer to 4.00%. That’s over 10 to 50 times more interest, just for switching banks.
For me, I keep about $25,000 in cash for back-up savings and short-term money goals. Here’s a comparison of how much interest that money would earn in in different accounts:
Account | APY | Interest (1 Year) |
|---|---|---|
Checking | 0.01% | $2.50 |
Savings | 0.38% | $95 |
HYSA | 4.00% | $1,000 |
Data source: Author’s calculations.
It’s funny, every time I talk about APYs and interest rates, people’s eyes glaze over.
But seeing real dollars that can buy real things (like my mid-life crisis Jeep), it starts to make sense. Keeping cash stored in low-interest checking accounts is a mistake.
You can make so much more just by transferring that money to a different bank.
If you’ve got a big cash pile, check out these top high-yield accounts paying up to 4.20% APY. Open an account and put your money to work ASAP.
Picking the best high-yield savings account
By the way, you don’t need to completely switch all your banking over to a new place. I didn’t.
I still use my old big bank for checking, credit cards, and direct deposit. It’s just my idle cash savings that I moved over.
While the APY is important when you choose a high-yield account, there are a few other things to look for:
FDIC insurance: Make sure your money is protected up to $250,000 per account holder.
No monthly fees or balance requirements: Any fees you pay will eat into your interest earnings.
Easy access to your money: Transfers should be fast, and the mobile app should be smooth.
I have both of my banks connected to each other on the back end. So transferring money is super easy and it usually only takes one day.
What are you going to buy with your interest?
Most people shrug off bank interest — because they earn pennies. But when you’re earning 4.00% or more on a good size cash pile, that “pocket change” adds up fast.
In my case, it turned into a Jeep. But for you, it might turn into a weekend getaway, a plane ticket to see family, or just a bigger, fatter emergency fund that helps you sleep better at night.
High-yield savings accounts pay real money. And the only thing you have to do is move your cash to a better-paying account.
What do you have to lose? Compare top high-yield savings accounts and start earning more today.
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