How This Common Banking Mistake Could Cost You $1,000 or More

A savings account is a smart spot to keep your emergency funds or stash money for your next big financial goal. It’s safe, accessible, and often the first place people park their cash before investing. But not all savings accounts are created equal — and picking the wrong one could leave you missing out on serious money.

Many traditional savings accounts offer a very low annual percentage yield (APY). For example, as of March 17, the Federal Deposit Insurance Corporation reported the average APY for savings accounts at just 0.41%. That’s barely anything in interest earnings.

On the other hand, high-yield savings accounts offer significantly better APYs, which means your money grows faster — potentially earning you hundreds or even thousands more over time.

“High-yield savings accounts are a great way to earn more on your money, especially with current interest rates,” says Eric Mangold, founder and wealth manager at Argosy Wealth Management. “If your money is sitting in a traditional savings account with a low APY, it’s time to review your options. You could be earning 3%, 4%, or even more with a high-yield account.”

Here’s why not switching to a high-yield savings account might be costing you big.

Traditional Savings Account vs. High-Yield Savings Account: The Real Difference

Traditional savings accounts typically offer minimal interest — usually under 0.5% APY. High-yield savings accounts, however, can offer rates between 3% and 5%. For instance, according to U.S. News & World Report, Cloudbank 24/7 was leading the pack in March 2025 with a 4.57% interest rate.

Let’s break down what this means for your money:

• With $24,450 in a traditional savings account at 0.41% APY, you’d earn roughly $100.25 in interest after one year.
• With the same amount in a high-yield savings account at 4.5% APY, you’d make about $1,100.25 — a difference of nearly $1,000 in your pocket!

That’s a substantial opportunity cost if you’re leaving your money in a low-yield account.

The Downsides of High-Yield Savings Accounts

• Withdrawal Limits: Some high-yield accounts restrict the number of withdrawals you can make monthly or annually. Going over can trigger fees.
• Investment Returns: Investing in the stock market, like the S&P 500, has historically yielded around 12.39% annually over the past decade, far outpacing even the best high-yield savings rates.
• Rate Fluctuations: APYs on high-yield accounts can change quickly with the market and central bank policies.

What to Check Before Opening a High-Yield Savings Account

Choosing the best high-yield savings account isn’t just about chasing the highest APY. Eric Mangold recommends considering these factors too:

• Is there a minimum balance required to avoid fees or maintain the highest rate?
• Are there withdrawal limits or penalties?
• Does the bank or credit union have FDIC (or NCUA) insurance for your protection?
• Are there monthly maintenance or hidden fees?

Final Thoughts: Make Your Money Work Harder for You

Having a savings account is essential for financial security, but choosing the right one can significantly impact how quickly your money grows. A high-yield savings account is an easy, low-risk way to earn more interest and avoid leaving money on the table.

Do your homework, compare rates, and read the fine print. Switching your funds to a high-yield savings account could add up to thousands of dollars in extra interest over the years — without taking any extra risk.