How to Avoid The Trillion-Dollar Savings Mistake
According to recent data, $1.748 trillion* is sitting in low-interest savings accounts in the U.S. alone. That’s trillion with a T—just lounging around, barely earning anything.
Your savings should be making more sense
Why Your Money Deserves Better
Let’s start with a staggering number: $1.748 trillion is sitting in low-interest savings accounts in the U.S. alone.
That’s trillion with a T—and most of that money is earning next to nothing. If your savings account is giving you 0.01% interest, that’s not even keeping up with inflation. It’s like parking your money in a hammock and watching it nap while prices quietly rise all around you.
You’re actually LOSING money, not SAVING money, thanks to inflation being 2.3% as of April 2025. So to be SAVING money, you need to be earning more than 2.3%
Meanwhile, banks use your money to issue loans, earn interest, and build wealth—for them.
But here’s the good news: your money doesn’t have to sit around snoozing. With one small switch, you can make it work harder without lifting a finger.
What Is a High-Yield Savings Account (HYSA)?
A high-yield savings account, or HYSA, is exactly what it sounds like—a savings account that gives you a much better return on your money.
- ✅ Insured (FDIC in the U.S. or APRA in Australia)
- ✅ Easy to access (usually online or via app)
- ✅ Flexible (no term lock-in like a CD or term deposit)
One of the biggest perks of a HYSA is that your money is still liquid—you can access it whenever you need to. Unlike a certificate of deposit (CD) or a term deposit, there’s no lock-in period where you’re penalized for early withdrawal. That makes it a great home for your emergency fund or short-term savings goals. You’re earning solid interest, but still have the flexibility to move your money if life throws you a curveball (or a surprise dental bill).
But unlike traditional savings accounts, which often offer 0.01%–0.45% APY, a good HYSA right now can offer anywhere between 4.0% to 5.0% APY.
💡 Here’s a quick reality check:
Let’s say you had $1,000 in a standard savings account earning 0.4% APY:
- You’d earn just $4 in interest over the entire year.
Now, if you had that same $1,000 in a HYSA earning 4.3% APY:
- You’d earn $43 in a year.
That’s more than 10x the return—just for choosing a better place to park your cash.
No extra effort, no risk, no market drama. That’s money literally being left on the table if you don’t make the switch.
📈 And it scales:
| Balance | Traditional Savings (0.4%) | HYSA (4.3%) | Extra Earned |
|---|---|---|---|
| $1,000 | $4/year | $43/year | $39 |
| $5,000 | $20/year | $215/year | $195 |
| $10,000 | $40/year | $430/year | $390 |
| $20,000 | $80/year | $860/year | $780 |
What to Look for in a Great HYSA
Now, before you Google “best HYSA” and click the first shiny link, let’s go over what makes an account actually worth your time. It’s not just about chasing the highest rate.
🧮 APY (Annual Percentage Yield)
This is the number that tells you how much interest you’ll earn on your balance each year. Yes, you want this to be high—but not at the cost of annoying terms. A high APY along with the magic of compound interest, will help grow you wealth exponentially.
Also, keep in mind that some banks offer introductory rates which drop after a few months unless certain conditions are met.
💸 Zero Monthly Fees
You shouldn’t be charged for saving money. Look for accounts that have $0 in monthly maintenance fees. These days, that’s the standard for good HYSAs—don’t settle for less.
🔄 Withdrawal or Transfer Limits
Some HYSAs limit how many withdrawals or transfers you can make per month (usually 6 in the U.S.). In Australia, you might only earn the high interest in months where you don’t make any withdrawals.
That’s not necessarily a bad thing—it helps keep your savings in savings—but it’s worth knowing up front. Be sure to compare options not just on rates, but on withdrawal limits as well.
💰 Minimum Deposit or Balance Requirements
Some accounts require a certain amount to open or to earn the best rate. If the rate only applies to balances over $10,000 and you’re planning to stash $1,000—you won’t get what you signed up for.
Where to Find the Best HYSA Rates
Since rates, fees, and terms change all the time, I recommend using trusted comparison tools to find your best options.
🔍 In the U.S.:
👉 Investopedia’s best high-yield savings accounts
👉 NerdWallet’s best high-yield savings accounts
🦘 In Australia (rates are over 5%):
👉 Canstar’s high-interest savings accounts
Look for FDIC or APRA-insured banks in the US and Australia and read the fine print. Watch out for teaser rates and requirements like minimum monthly deposits or no withdrawals.
Final Thought
Switching to a high-yield savings account is one of those rare money moves that takes 15 minutes and pays off for years.
If your money has been hanging out in a dusty old savings account, give it a better home. One where it can quietly grow in the background while you do, well, anything else.
It’s the low-effort, high-return relationship we all deserve.
LIVE RICHLY. FIND HAPPY
Sources: *Estimate provided for illustrative purposes. Total U.S. savings account balances are extrapolated from findings in the Vanguard Savings Study (March 2025). For details, visit vanguard.com/cashplus.
Join the Live Richly newsletter for simple, smart tips on saving, investing & obtaining financial freedom
Kathleen McDowell is an investor, writer, and financial educator. She shares how to build wealth and reach financial freedom for the sole purpose of having the ability to live a rich life ON YOUR OWN TERMS and SPEND TIME ON WHAT MATTERS MOST.
She offers free financial education—no courses to buy, no crypto pitches, no hidden agenda. Just honest, practical advice from someone who’s achieved financial freedom and wants to help you do the same. Because it’s frustrating to see people stuck in jobs they don’t love or stressed about money, simply because they haven’t been shown the way out.
READ MORE about Investing Wisely…
