How much Americans are losing by keeping money in low-yield accounts

Switching banks can feel like a hassle. There are the forms to fill out, new direct deposits to set up, and maybe some hesitation about trusting your money to a bank you’ve never used before. That caution is understandable — but it’s likely costing you.

While you stay loyal to a familiar bank, that bank could be earning a fortune off your deposits while paying you almost nothing in return. This unwillingness to change banks is quietly draining savers of potential interest, especially as inflation chips away at what that money can buy.

The good news is you don’t have to completely abandon your current bank to close the gap. The best high-yield savings accounts let you keep your checking account exactly where it is while your savings earn substantially more elsewhere. 

The high cost of low-yield accounts

Big banks like Chase and Wells Fargo generally offer 0.01% annual percentage yield (APY) as the standard yield on savings deposit accounts at their banks.

This meager return doesn’t just fail to keep up with inflation — it barely registers at all, effectively eroding your purchasing power over time. High-yield savings accounts fare much better, often coming close to or exceeding the inflation rate. That said, when inflation runs hot, even a 4% APY could fall short, but it doesn’t mean it’s not worth earning what interest you can.

The difference in earnings is stark. Consider this comparison with $10,000 saved over two years:

This $814 difference represents real money that could help with expenses, bolster emergency funds or contribute to financial goals. The lost opportunity grows even more significant with larger balances or longer timeframes. 

Some traditional banks offer premium savings options with higher yields, but they often come with steep requirements. Chase’s Premier Savings account offers a relationship rate of just 0.02% APY — and only if you link a premium checking account and complete at least five transactions each statement period.

In contrast, most online-only banks offer competitive rates with no minimum deposit requirements and no monthly service fees.

Why people stay with low-yield accounts

Inertia is one reason people stick with an account that isn’t earning much interest. It’s the “if it isn’t broken, don’t fix it” mentality, and in plenty of areas of life, that instinct serves you well. But when staying with what’s familiar quietly costs you money every year, it’s worth understanding why that habit feels so hard to break. 

A savings survey by Bankrate revealed the top reasons people cited for not moving their savings to online banks.

Preferred access to a local branch

Nearly half of respondents (45%) cited preference for local branch access as their primary reason for avoiding online banks — and that instinct makes sense. Knowing you can visit a branch and talk to a person face-to-face feels reassuring. 

Banks count on that feeling of safety to keep deposits in place, even when keeping some money elsewhere wouldn’t cost you that reassurance at all. The good news is you don’t need to give up your local relationship to benefit from high-yield savings.

Keeping your savings with a low-earning bank for branch access costs the average saver hundreds or even thousands over time. Before declining that extra interest, consider how often you actually visit your branch for savings-related transactions. For many people, the honest answer is rarely, if ever.

Comfort level with current financial institution

Familiarity and routine keep many customers loyal to their existing banks, and there’s something genuinely comforting about sticking with an institution you’ve trusted for years. The average person holds onto a savings account for 17 years, according to Bankrate’s Checking Account Survey — that’s a long time to build trust, and it’s understandable not to want to disrupt it. 

But this comfort comes at a real cost. If you had $10,000 sitting in a savings account at your current bank, would you rather have earned $816 or $2 in interest after two years?

For those hesitant to make a complete switch, consider starting small. Many high-yield savings accounts allow you to open an account for as little as $1, so you can test the waters without disrupting the relationship you already trust..

Security concerns

Many consumers express worries about the safety of their money at banks they’re less familiar with — and that is understandable, since trusting an unfamiliar name with your savings can feel like a real risk, even when it isn’t one.

The reassuring reality: There are more than 4,000 banks in the country, so simply not recognizing a name isn’t a reason to shy away. As long as you’re dealing with a bank covered by the Federal Deposit Insurance Corp. (FDIC), your money is protected exactly the same way it would be at a local FDIC-insured bank down the street. 

Not enough savings to make it worthwhile

Some savers believe their balance is too small to bother chasing a better rate — and if money is tight, an extra few dollars a year can understandably feel like it’s not worth the hassle of switching.

But consider this: if you save $100 at 3.7% APY for a year, you’ll earn $3.70 in interest.

While that might seem small, it’s the equivalent of getting a free pound of apples at the grocery store. Most people wouldn’t pass up a $1 discount on produce, yet they overlook the opportunity to earn several times that amount through better interest rates — and once the account is set up, that extra money adds up without requiring any more effort from you.

The power of compound interest over time

Compound interest — earning interest on your interest — creates dramatic differences between low and high-yield accounts over time. The longer your money remains invested, the more pronounced this effect becomes.

Consider these comparisons:

After 20 years, $10,000 in a high-yield account would earn around $11,911 in interest — around 595 times greater than the $20 earned in a traditional account. This difference represents significant lost opportunity for long-term savers. 

Online banks gaining market share

The benefits of online banking haven’t gone unnoticed. Data from the Federal Financial Institutions Examination Council shows online-only banks like Ally Bank posting strong deposit growth — though the trend among traditional banking giants is mixed.

Source: FFIEC Call Reports, Schedule RC-E 

The picture varies by bank: Chase’s savings and money market deposits grew at a solid clip, though still well behind Ally’s growth rate, while Wells Fargo’s fell. Online banks aren’t uniformly outpacing every traditional bank, but they continue to offer the rate advantage that’s driving deposits toward them. 

How to maintain your banking relationship while maximizing yields

The good news is that switching to a high-yield savings account doesn’t require abandoning your current bank relationship. You don’t need to change anything about your day-to-day financial routine to get better returns — you’re simply sending your savings somewhere it will earn more, while keeping your checking account exactly where it is.

It’s worth keeping a buffer in checking rather than moving every dollar out. If you can, keep enough to cover one to two months of expenses. This way, you won’t risk running into an overdrawn account due to money being in transit between your checking and savings.

This hybrid approach — keeping your checking account at your current bank while moving savings to a high-yield account — offers the best of both worlds. You maintain familiar banking relationships and branch access for daily transactions while earning competitive returns on your savings.

Separating your savings from the bank where your checking account is can also help you avoid spending that money on unintended expenses.

Steps to switch to a high-yield savings account

The way to earn more on your savings is to open a high-yield savings account at an FDIC-insured online bank. Here’s how:

1. Compare rates, fees and features at Bankrate’s best high-yield savings accounts to find the right fit.
2. Check the minimum opening deposit, the minimum balance needed to avoid fees, and any monthly service fee. Most online-only banks skip these, but it’s worth confirming. Also make sure that features like mobile deposit or ATM access meet your needs.
3. Open the account and link it to your existing checking account for easy transfers. Bankrate’s guide to opening a bank account online walks you through the process step by step.
4. Make a small test transfer to ensure everything works properly.