If You Do One Thing for Your Finances This Year, Make It This

Do you have cash sitting in a bank account that's earning near-zero interest? If you can do one thing for your personal finances before the end of 2023: open a high-yield savings account.

Too many bank customers are effectively losing money by missing out on higher APYs. According to FDIC data, as of Dec. 18, 2023, the national average bank savings account was paying only 0.46% APY. If you had $10,000 in a savings account that paid the national average APY, after one year you would have… $10,046.

That's terrible! You and your savings deserve better than to put up with near-zero interest rates. Move your cash to a higher-yielding account. Earn interest. Make your money work harder for you.

Let's dive into a few more details about why this one year-end financial move is so important.

In case you didn't notice: Interest rates went up in 2023

During the past several years since the Great Financial Crisis of 2008, America's financial system was in a long stretch of low interest rates. This allowed banks to get away with paying lower yields on savings accounts and certificates of deposit (CDs).

After so many years of ultra-low interest rates, many people might have forgotten that savings accounts are actually supposed to help your money grow. But during 2023, as a monetary policy response to high inflation, the Federal Reserve hiked interest rates fast and furious. This led to higher bank savings account APYs than we've seen in a long time.

The good news is that, as of December 2023, the best high-yield savings accounts are now paying 5.30% APY.

See how much you can earn with a high-yield savings account

Getting a higher yield on your savings account can make a meaningful difference to all kinds of savers, no matter how much money you have in the bank. Let's look at a few different savings account balances, and how they'd benefit from a higher APY.

Here's why we chose the numbers:

• $1,200 is the median U.S. savings account balance, according to a survey from The Motley Fool Ascent in July 2023.
• $5,000 is the median emergency savings balance, according to the Transamerica Center for Retirement Studies. (Their number is bigger than the one that our survey found, but it's worth including to illustrate a slightly larger account balance.)
• $25,898 is the average U.S. savings account balance, according to our Motley Fool Ascent survey. (Some high-net-worth Americans have a lot more money in the bank than the median or "typical" household, so that makes the average savings account a lot bigger than the median.)

Here's how much each of these savings accounts would earn after one year with the national average APY compared to a high-yield savings account:

As you can see, moving your money into a higher-yielding savings account can make a big difference. If you want your money to grow, get it out of the near-zero average bank savings account, and go get a higher APY.

Why high-yield savings accounts are a good deal for people with low savings

Many Americans don't have much money in the bank. Our Motley Fool Ascent survey found that 41% of Americans have less than $500 in savings. If you don't have a big savings account balance, you might wonder if it's worth getting a high-yield savings account. Our survey found that, when asked why they hadn't moved money to a higher-yielding account, 35% of people said "I don't have enough savings for a higher interest rate to matter to me."

Life is hard when you don't have enough cash in the bank and you're living paycheck to paycheck. But even for people with near-zero savings, a high-yield savings account is still worth getting. Here's why:

• You deserve every dollar: Banks that pay near-zero interest on savings accounts are not helping you succeed; they're just making money off of you. It's the principle of the thing: As a bank customer, you deserve to earn as much interest as the market will offer.
• Your money needs to grow: Even if you only have a few hundred dollars of emergency savings, you deserve to have that money go to work. Let your savings account quietly earn more money for you with the power of compounding interest.
• You can get inspired by higher APYs: With near-zero interest rates, it often feels like there's no point in saving money. But earning higher interest can help motivate you to take steps toward better financial health. It feels incredibly empowering to see your savings account grow. What if a high-yield savings account could help motivate you to clarify your personal finances, get a budgeting app, and make some big changes in your financial life?

Bottom line: The best high-yield savings accounts are now offering APYs of up to 5.30%. Anyone who has cash in the bank, even just a few hundred dollars, deserves to earn interest on their savings. Don't put up with shabby treatment and low APYs from banks. This year, go get some yield. You, and your savings, are worth it!