Are Savings Accounts Worth It?

To anyone that questions their savings account, and for those who wonder if savings accounts are worth it, you’re not alone.

According to Bankrate, you would receive between .01% to .05% on any of Bank of America’s savings account options. I don’t know about you, but to me, this is almost an insult.

Instead of placing your money in a “big bank” savings account like Bank of America, there are a couple different options. I’ll explain each one below. But first, let’s run the numbers and see just how useless (in my opinion) “big bank” savings accounts are.

Are Savings Accounts Worth It? The numbers:

are savings accounts worth it

Using BOA’s highest savings account APY of .05%, and $1,000 to save, let’s see what I would make if I put all of that $1,000 into the savings account for one full year.

For those that don’t know: APY = Annual Percentage Yield. It’s the yield (interest) paid to you after one years time.

Savings: $1,000

APY: .05%

Time: 1 year


savings account yield calculator
Source: Nerdwallet Savings Calculator

That’s right, folks! You would have a whopping $1,000.50 at the end of one full year, if you left the entire $1,000 in a savings account at BOA.

This measly amount is not even keeping up with average inflation. See Trading Economics inflation data for more, if you are curious about inflation rate data.

If you must have a savings account, there are better options in my opinion…

The Better Option for Savings Accounts

High yield savings accounts have been around for quite some time. But they seem to be little known. 

People sometimes look at me like I’m crazy when I mention high yield savings accounts, like they’ve never heard of such a thing. But they’re out there.

high yield savings accounts
Source: Bankrate


Notice the APY’s in the image above? Quite a bit better than the “big banks.” However, they were even better than this up until recently.

I had a high yield savings account with Discover that yielded an impressive 2%. After that, I had a American Express high yield savings account that yielded about 1.75%. But unfortunately for these high yield accounts have dropped substantially due to the Federal Reserve lowering interest rates lately.

When the fed lowers rates, it trickles down to everything: car loans, mortgage rates and savings accounts to name a few.

Anyway, lets run the numbers for what I would make if I stuck that same $1,000 in one of the savings accounts shown in the image above:

Savings: $1,000

APY: .70%

Time: 1 year


high yield savings account calculator
Source: Nerdwallet savings account calculator


So as you can see, you won’t retire wealthy off of this, but you sure as hell make more money than you would in a “big bank” savings account.

Just imagine the interest made when rates are at 2% for high yield savings accounts!

The second option to replace “big bank” savings accounts is my personal favorite. But again, I am NOT a financial adviser, so what I say should NOT be taken as advice. This is purely educational.

Why Investing Is My Favorite Option For Storing Extra Money

Investing! Yes! That’s my favorite method of storing my excess cash. And the reason is simple:

Because the potential to make 5, 6 or even 10% or more on my money is there.


According to Business Insider, the average S&P 500 return over the last 140 years is 13.6% per year.

So now let’s run the numbers as if I stuck that $1,000 in a S&P fund (maybe ticker: SPY) for year, and ASSUMED a 13.6% return:

Investment: $1,000

Return: 13.6%

Time: 1 year


investment calculator
Source: Smart Asset investment calculator

As you can see, the POTENTIAL (key word is potential) to make a very good return on my money is much greater than a standard “big bank” savings account.

However, it should be noted, that the stock market is very risky. Some years it finishes with a negative return. The 13.6% is simply an average. Some years are worse than others, and some years are better than others.

NEVER INVEST IF YOU DON’T KNOW WHAT YOU ARE DOING! Always seek professional guidance before making any financial decision.


So, are savings accounts worth it? That’s really for you to decide. However, my opinion is this:

It is my belief that standard “big bank” savings accounts are all but useless. Sure, they serve a purpose, but that purpose is minimal. 

The number one reason for a standard “big bank” savings account, would be convenience in my opinion. Ease of use. However, when I had my high yield savings accounts, it was nearly as easy to swap money from there to my checking. But, it didn’t happen instantaneously like it would have if I had a savings account at the same bank my checking account was with. But, it just took a day or 2 to see the funds in my checking. This was not a big deal to me.

However, my favorite method of storing my excess money is in the stock market. That’s just me and my opinion. I have a high risk tolerance, and I feel I am smart about my investments. This is certainly not an option for some, and I totally understand that. You have to do what’s best for you!


WARNING/DISCLAIMER: Investing and trading carry significant financial risks. I am not a licensed financial or investment adviser. Nothing on should be considered financial or investment advice. Everything on is for educational purposes only, and should NOT be considered advice. Consult a professional financial or investment adviser before making any financial decision. Never enter any investment or trade without consulting a professional and licensed financial or investment adviser. Never enter any investment or trade based on anything you read or see here on







Leave a Comment

Your email address will not be published. Required fields are marked *