This Banking Mistake Could Cost You Hundreds of Dollars a Year

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[[{“value”:”Image source: The Motley Fool/Unsplash
Many people don’t realize just how bad their savings account is. They may not even know the interest rate they’re earning on their deposits.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. If that describes you, then you may be costing yourself hundreds of dollars each year — and thousands in the long run.If your bank pays a low annual percentage yield (APY), let’s look at how much interest you could be earning elsewhere — and how you can easily switch to a better account.The cost of a low APYMost big, traditional banks offer savings accounts with very low APYs. The national average APY is just 0.41%. Meanwhile, the best high-yield savings accounts have APYs of about 4.00% or more.Here’s how much a deposit of $10,000 would earn over time in 1) an account paying the average rate and 2) an account paying 4.00%.YearsInterest Earned (0.41% APY)Interest Earned (4.00% APY)1$41$4005$207$2,16710$418$4,80220$853$11,911Data source: Author’s calculations.The 4.00% APY account would earn $359 more in the first year alone. Over the course of years, the difference is astronomical.Want to earn 10 times the national average APY? Check out our list of the best high-yield savings accounts and open a new account today.Why do some banks offer much higher APYs?Many big, traditional banks have physical bank branches. This increases their costs, so they tend to have lower APYs — and more fees. On top of that, they know that many customers will never bother to switch bank accounts, so they don’t feel the need to pay more.The banks that pay the highest APYs tend to be online-only. This saves them a lot of money, so they can pass those savings on to their customers through higher interest rates and low (or no) fees.What to look for in a savings accountIf you’re ready to switch, here are some key features to look for:High APY. Look for accounts offering at least 3.75% APY to maximize your earnings.No monthly fees. Avoid banks that charge fees just to keep your money there.Easy access to your money. Ensure the account allows quick transfers when needed. The best banks have user-friendly apps and websites that make it fast and easy to manage your money.FDIC insurance. Make sure your bank is insured, so your money is protected up to $250,000.Good customer service. Read reviews and choose a bank with helpful support.A good checking account. You’ll probably want to link your new savings account to a checking account at the same bank. The best checking accounts pay interest and have other perks like no overdraft fees and a large ATM network.How to switch to a better accountSwitching to a high-yield savings account is simple. Just follow these steps:Research your options. Compare APYs, fees, and key features.Read the fine print. Some banks require you to deposit a minimum amount to earn their highest APYs, for example.Open a new account. This should only take a few minutes online.Transfer your money. Move your savings from your old account to start earning more interest.Update automatic deposits and withdrawals. If you have direct deposits or automatic bill payments set up, update them ASAP.Close your old account. Once everything is moved over, close the old account to avoid unnecessary fees.I recently switched bank accounts, and I completed all the above in about an hour. Not bad for thousands of dollars in future interest payments!Don’t delay — it’s easier than you thinkMoving your savings to a high-yield savings account is an easy, surefire way to start earning more money now. Don’t settle for a stingy bank just because you think switching will be a headache. With competition more heated than ever, banks have made it incredibly easy to open and fund a new account.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Many people don’t realize just how bad their savings account is. They may not even know the interest rate they’re earning on their deposits.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

If that describes you, then you may be costing yourself hundreds of dollars each year — and thousands in the long run.

If your bank pays a low annual percentage yield (APY), let’s look at how much interest you could be earning elsewhere — and how you can easily switch to a better account.

The cost of a low APY

Most big, traditional banks offer savings accounts with very low APYs. The national average APY is just 0.41%. Meanwhile, the best high-yield savings accounts have APYs of about 4.00% or more.

Here’s how much a deposit of $10,000 would earn over time in 1) an account paying the average rate and 2) an account paying 4.00%.

The 4.00% APY account would earn $359 more in the first year alone. Over the course of years, the difference is astronomical.

Want to earn 10 times the national average APY? Check out our list of the best high-yield savings accounts and open a new account today.

Why do some banks offer much higher APYs?

Many big, traditional banks have physical bank branches. This increases their costs, so they tend to have lower APYs — and more fees. On top of that, they know that many customers will never bother to switch bank accounts, so they don’t feel the need to pay more.

The banks that pay the highest APYs tend to be online-only. This saves them a lot of money, so they can pass those savings on to their customers through higher interest rates and low (or no) fees.

What to look for in a savings account

If you’re ready to switch, here are some key features to look for:

1. High APY. Look for accounts offering at least 3.75% APY to maximize your earnings.
2. No monthly fees. Avoid banks that charge fees just to keep your money there.
3. Easy access to your money. Ensure the account allows quick transfers when needed. The best banks have user-friendly apps and websites that make it fast and easy to manage your money.
4. FDIC insurance. Make sure your bank is insured, so your money is protected up to $250,000.
5. Good customer service. Read reviews and choose a bank with helpful support.
6. A good checking account. You’ll probably want to link your new savings account to a checking account at the same bank. The best checking accounts pay interest and have other perks like no overdraft fees and a large ATM network.

How to switch to a better account

Switching to a high-yield savings account is simple. Just follow these steps:

1. Research your options. Compare APYs, fees, and key features.
2. Read the fine print. Some banks require you to deposit a minimum amount to earn their highest APYs, for example.
3. Open a new account. This should only take a few minutes online.
4. Transfer your money. Move your savings from your old account to start earning more interest.
5. Update automatic deposits and withdrawals. If you have direct deposits or automatic bill payments set up, update them ASAP.
6. Close your old account. Once everything is moved over, close the old account to avoid unnecessary fees.

I recently switched bank accounts, and I completed all the above in about an hour. Not bad for thousands of dollars in future interest payments!

Don’t delay — it’s easier than you think

Moving your savings to a high-yield savings account is an easy, surefire way to start earning more money now. Don’t settle for a stingy bank just because you think switching will be a headache. With competition more heated than ever, banks have made it incredibly easy to open and fund a new account.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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