Personal Finance

Why Are Americans Still Missing the Golden Savings Opportunity?

Maurie Backman

Published: March 4, 2025 9:12 am

Years back, if you would’ve asked me if savings accounts were worth it, I would’ve said “eh.”

To be clear, it’s important to have money in savings at all times for emergencies. And I like to tell people to have a three-month emergency fund at a minimum to get through a period of potential unemployment.

But back when interest rates were something to laugh at, my advice would’ve been to use a savings account to stash your emergency fund, but put the rest of your money elsewhere.

Today’s interest rate environment is a very different beast, though. Because of that, I think now’s a great time to put extra cash into a savings account.

Do you realize what high-yield savings accounts are paying today?

You might assume that if you open a high-yield savings account today, or add money to one, you’ll be looking at somewhere in the ballpark of 1% or 2% interest. But would you believe that you can earn roughly double that?

It’s true. Of course, you’ll have to shop around for the best high-yield savings account. And there may be certain account minimums you have to meet.

But all told, many high-yield savings accounts are paying close to 4% today. And that’s even after the Fed cut interest rates a few times in late 2024.

So at this point, if you’re looking to diversify your portfolio, you don’t necessarily have to look to bonds for the “safe” portion. You could instead enjoy much more flexibility and zero risk with a savings account.

Of course, you will want to make sure your savings account is FDIC-insured. And you should know that the FDIC insurance limit is $250,000, or $500,000 on a joint account.

But that buys you plenty of protection against a bank failure. The only way to lose out on principal in a high-yield savings account is to take your money out yourself.

Certain people can benefit more from a high-yield savings account today

There are some groups of people who should especially consider putting more money into savings right now.

First, if you’re trying to meet a short-term goal, investing your money is risky, because you may not have ample time to ride out a market downturn. So if you’re hoping to buy a new car in 2026 or a house in 2027, the best place for your down payment funds is a high-yield savings account.

It’s also a good idea for near-retirees to put more money into savings. Once you retire, you’re going to want enough cash to cover one to two years of essential bills. That gives you the leeway to leave your investments alone if the stock market ends up tanking.

Similarly, if you’re already retired and don’t have tons of cash reserves, you may want to add to your savings. It wouldn’t even be a bad idea to cash out some stock market gains you’re sitting on and put that money in a safer place. Just make sure to speak to a financial advisor or tax professional before you do, since there could be tax implications.

All told, it’s a great time to open or beef up a high-yield savings account. But today’s rates aren’t going to last forever. Get moving before you miss the opportunity.