Americans Say Savings Accounts Lag Behind Inflation: Here’s How to Fix It
A recent survey by WalletHub reveals that 65% of Americans feel their savings aren’t keeping pace with inflation, highlighting a common issue among bank customers: many aren’t seeking high-interest options for their savings.
The WalletHub survey, conducted with over 200 participants, found widespread dissatisfaction with traditional savings accounts. Banking experts suggest this is largely due to a lack of comparison shopping.
“People often choose the easiest option for their savings, not necessarily the most rewarding,” said Odysseas Papadimitriou, CEO of WalletHub.
While the average savings account at online banks offers a 3.6% annual interest rate—exceeding December’s inflation rate of 2.9%—many high-yield savings accounts offer even better returns, with rates of 4% or more.
High-yield savings accounts are easy to find through a simple internet search. Greg McBride, Chief Financial Analyst at Bankrate, emphasized their accessibility:
“Opening one of these accounts takes just a few minutes and can significantly boost your savings.”
Yet many savers are still missing out. Bankrate’s 2024 survey found that two-thirds of consumers earn less than 4% interest on their savings.
The best interest rates are typically found at online banks, which operate without the overhead costs of physical branches. Traditional brick-and-mortar banks, on the other hand, offer an average savings account interest rate of just 0.55%.
However, the move to online banks can be overwhelming for some of its customers. For most people, switching is an inconvenient feeling that large banks benefit from by holding customers. To start with, more unknown online smaller banks also fear people away.
“A lot of people are hesitant to apply for new financial accounts,” Papadimitriou pointed out. “Even though smaller banks and credit unions often offer the best rates, people feel less secure using them.”
Confusion about high-yield savings accounts also prevents many from taking advantage of them. A Santander Bank survey found that only 29% of consumers use high-yield accounts. Many don’t realize these accounts are often FDIC-insured or that they can open one without leaving their primary bank.
“There’s a fundamental misunderstanding of what it takes to earn high yields,” McBride explained. “You don’t need to move all your accounts—just take advantage of available options.”
According to WalletHub, consumers prioritize low fees over high interest rates when choosing bank accounts. Overdraft fees are particularly unpopular; three-quarters of survey respondents support capping them at $5.
In December, the Biden administration proposed a $5 overdraft fee cap as part of its effort to combat “junk fees.” However, the banking industry argues that such measures could harm vulnerable customers and faces uncertainty under the new Trump administration.
Security also remains a concern. Three-fifths of respondents worry about potential bank hacks. Recent technical issues at Capital One, which delayed deposits nationwide, added to these anxieties.
Experts agree that consumers can earn more on their savings by exploring high-yield accounts offered by online banks. These accounts often come with competitive rates and minimal fees, providing a solution for those looking to outpace inflation.
“Switching to a better savings account is within reach for everyone,” McBride said.
