Stop Letting Big Banks Insult You -- Get a 5% APY Savings Account

What if your boss asked you to take a 99.8% pay cut? You'd feel insulted. You'd quit your job. You'd take your talents elsewhere. So why are you putting up with this same shabby treatment from your bank?

Some of America's biggest banks are paying shockingly low rates on savings accounts -- as low as 0.01% APY. When you compare that to rates on the best savings accounts (around 5.00% APY), that's a difference of 99.8%. Big banks are asking you to settle for 99.8% less than a competitive market "pay rate" for your savings.

People should feel, well...insulted by this. If your bank is only offering 0.01% APY, it is effectively taking money out of your pocket. Your savings are shrinking thanks to inflation. You have so many better options for places to put your money. Don't settle for insultingly low APYs anymore!

Let's look at a few reasons why you shouldn't let yourself be pushed around by big banks -- and what you can do with your savings instead.

Our Picks for the Best High-Yield Savings Accounts of 2024

SoFi Checking and Savings APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. Min. to earn $0 Open Account for SoFi Checking and Savings Member FDIC.	APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.	Min. to earn $0
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of June 1, 2024	Min. to earn $1

Big banks act like they don't need your money

Why are big banks' savings account APYs so low? Banks will pay savers as little as the banks can get away with. If savers choose to keep putting money into low-yield savings accounts, banks will let them. Because the major national banks are so big, with so many millions of customers depositing their paychecks and leaving their money in low-yield accounts, the big banks haven't had to try very hard to get more deposits. But that situation is changing fast.

With the Fed keeping the federal funds rate at 5.25%-5.50% (for now), the big banks are facing more competition for deposit dollars. People are moving their money to higher-yielding accounts, like the best savings and money market accounts, and CDs. If you can earn 5.00% APY or more on your savings, why not switch banks? You worked hard for your money, and you deserve to earn yield on your cash.

Where to move your money: Best savings accounts

If you still have money sitting in a big bank's low-interest savings account, earning as little as 0.01% APY, it's time to give your money a pay raise. The best savings accounts today are offering 5.00% APY or higher.

For example, if you have $10,000 of cash savings in a 0.01% APY savings account, after one year, you'll earn $1 of interest. That's all! But if you put that cash into a 5.00% APY savings account or money market account, after one year, you'd earn $500.

The best savings accounts are not usually offered by widely recognized national "brand-name" banks. Instead, you might get the best APY from an online savings account, a fintech company that partners with an FDIC-insured bank, or an innovative brokerage like Wealthfront or Betterment. For example, the Wealthfront Cash Account offers 5.00% APY and free same-day withdrawals to qualifying external bank accounts.

But all of The Ascent's picks for best savings accounts and best money market accounts are FDIC insured. Even if your favorite savings account offer comes from a bank in another state or a smaller community bank that you haven't heard of, your money is protected with FDIC insurance.

Bottom line

There can sometimes be a few good reasons to keep some money in a 0.01% APY savings account. But just like most people shouldn't accept a 99.8% pay cut, you should feel insulted by huge, profitable financial institutions that refuse to pay decent interest on your savings. The best savings accounts and money market accounts have set a new standard for what people should earn on their savings: 5.00% APY (or more). Don't settle for less -- and definitely don't settle for 0.01% APY.