Here’s Why I’m Keeping a Savings Account That Only Earns a 0.01% APY

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Savings accounts at big banks are pretty worthless for APY — but they have other benefits. Learn why one financially savvy writer is hanging onto hers. [[{“value”:”

I write a lot about bank accounts here at The Ascent. You might expect that I settle for nothing less than the highest annual percentage yields (APYs) across all my accounts — but you’d be wrong. In fact, I have a big bank savings account that pays only 0.01% on my saved cash. This might seem criminal given the fact that anyone can open a savings account that pays 4%, 5%, or more right now. But I’ve got a good reason for keeping this account open.

Overdraft protection is nice to have

Why am I tolerating such a low return on my saved cash? Two words: overdraft protection. If you’ve ever accidentally overspent your checking account balance, you know the pain of being assessed overdraft fees, and possibly also late fees as a result of having inadequate money to cover a bill that’s due. It’s not a fun situation, and during my many (many) years of living paycheck to paycheck, I was very close to the edge multiple times.

So I set up guardrails for myself, including enabling email alerts with my bank, so I quickly find out if my checking account balance drops below a certain level. I also opened my savings account and linked it to the checking account. If I accidentally overdraft the account, money is transferred from savings automatically to cover the shortfall.

It was an easy investment in additional peace of mind, and if you don’t currently have this kind of overdraft protection set up on your checking account, I recommend it.

I have a high-yield savings account, too

I keep my big bank savings account minimally funded to avoid maintenance fees — for the terms of this account, that minimum balance requirement is $300. It’s unlikely that I’d overdraft my checking to such a degree that $300 wouldn’t be enough to cover the charge. This doesn’t mean I have no other savings, though.

The bulk of my saved cash is in a high-yield savings account I opened with an online-only bank back in 2022. It doesn’t pay the highest APY available right now (currently 4.20%; it was as high as 4.35% until pretty recently), but I love its features — they make up for the slightly lower APY. My favorite one is the ability to create sub-accounts to help me save for different goals.

I use this account to hold the money I take out of my pay to cover quarterly freelancer taxes. I’ve also been using it to save for my upcoming home purchase and the emergency fund that will become even more crucial when I finally close on the mortgage. And when I’m saving money for an upcoming vacation or medical care for my cats or myself, it goes in there, too.

I have a checking account linked to the high-yield account, which makes it a lot easier to access my money when I need to. I can transfer it from the savings to the checking account in seconds, and then either take out money from an ATM or use my debit card to make a payment. I also recently ordered paper checks for that account, which gives me one more way to pay a bill or cover an expense.

Bank in the way that makes sense for your life

It’s very easy for personal finance experts to make broad pronouncements about what we all should be doing with our money. But sometimes, those recommendations don’t make sense for everyone. So really, you should be banking in the way that best works for you — personal finance is personal.

As for me, I could close my low-APY savings account altogether if I decided to switch my direct deposits and bill-paying activities to the checking account I have with an online bank. This might make my life a little easier, but honestly? I don’t mind having multiple bank accounts split between two banks.

Each account has a set purpose, and managing them isn’t a hardship for me. Plus, I actually really like the checking account I have with that big bank — it has no fees and it’s been extremely easy to manage over the 15 years that I’ve had it open. It works for my life.

And regardless of how you manage your money, opening a high-yield savings account is one of the best moves you can make right now, while the federal funds rate is still high. I love getting my interest payment once a month — it is truly passive income, and I’ve been able to use those little windfalls to pad my emergency savings as well as pay for fun purchases like hotel stays. If the bulk of your savings is languishing in an account paying mere pennies per month (if that), consider making a change.

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