58% of Americans Don’t Know This Secret to Earning More Without Changing Banks
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Most Americans wouldn’t pass up the chance to earn more money on their deposits if they knew it was easy. However, according to Santander’s Openbank Growing Personal Savings Tracker, many consumers could be missing out on hundreds of dollars per year in interest by not utilizing higher-rate savings accounts.
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Read on for more details on why more consumers aren’t receiving higher rates on their accounts at their banks.
The Santander survey found that 71% of Americans are not using higher-rate accounts, including money market accounts, high-yield savings accounts and certificates of deposit. For those who are using a higher-rate account, over half (56%) are earning at least 3% in interest.
The best part is that savers don’t even have to change banks to reap the benefits of extra earnings. Instead, they can open one or more higher-rate accounts at their current bank.
So why are the majority of Americans not taking advantage of this opportunity to earn more money?
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Swati Bhatia, head of retail banking and transformation at Santander Bank, said in the press release that misunderstandings around what it takes to get and manage a higher-rate account — as well as its benefits — can keep many Americans from earning interest that could help pay for recurring monthly expenses.
Here are some common misperceptions about higher-rate accounts.
According to the survey, nearly 6 in 10 (58%) don’t realize that it’s possible to open a higher-rate account, like a high-yield savings account, without leaving their current financial institution. In fact, it’s possible to open multiple higher-rate accounts — even across different institutions.
Over 6 in 10 Americans (63%) are not aware that many higher-rate savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC). However, as long as the account is opened at an FDIC-insured institution, these types of accounts are insured up to $250,000 per depositor, per institution.
According to the survey, 70% of Americans don’t realize that they can access savings in a high-yield savings account within a couple of business days — if not sooner. Plus, it’s easy to link a checking account to a savings account to facilitate quick funds transfers.
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Unfortunately, 40% of Americans don’t know what the current interest rate is on their savings accounts, and 72% aren’t aware that, in general, savings yields are the highest they’ve been in 15 years, per the survey.
Consider this example from First Fed. If you put $1,000 in a high-yield savings account that has a 4% APY that annually compounds, you’d have $1,040 after one year. While that might not sound like much initially, the next year, you’d be earning 4% on $1,040 rather than $1,000. After five years, you’d have over $1,200.
Almost 8 in 10 respondents believe it takes 10 minutes or more to open a savings account online, but sometimes it takes half that time or less. Investing a little time can pay off.
Misunderstanding what opening a higher-rate account can do for finances can lead to regret.
Almost 60% of respondents who already have higher-yield accounts wish they hadn’t waited to open one, while 42% of those who haven’t opened one yet wish they already had.
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This article originally appeared on GOBankingRates.com: 58% of Americans Don’t Know This Secret to Earning More Without Changing Banks
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