My Teens Pointed Out My Savings Rate — and They Were Absolutely Right

• At 0.01% APY, $25,000 earns about $2.50 a year. At 4.1% APY, the same money earns roughly $1,025.
• The Federal Deposit Insurance Corp. (FDIC) national average savings rate is 0.38%, so even an "average" account leaves hundreds of dollars on the table.
• Switching took under 10 minutes, all online. The only wait was for the money to move between banks.
• At the national average savings rate of 0.38%, $20,000 earns $76 a year. The same balance could earn up to nine times more with a SoFi Checking and Savings account. See SoFi®'s current rate.

At dinner one evening, my teenagers asked a straightforward question: “Is 4.1% a good APY?” They are 17 and 19 and were shopping for their first savings accounts, and they had come across a high-yield option. I told them it sounded almost too good to believe. Then they asked what my account paid. I honestly had no clue. It turned out to be 0.01%. On my $25,000 emergency fund, that worked out to about $2.50 a year. At 4.1%, that same money would earn around $1,025.

What my kids noticed and why I had overlooked it

My kids were not trying to give me a lecture. They were comparing choices for their own first accounts, and they asked about the rate the way children often check in with a parent to see whether they are on the right track. Once we talked through the 4.1% offer, the obvious next question was: What does your account pay? I did not have a satisfying answer.

My reason for never checking the rate was not especially good. I simply did not think about it. For me, a savings account was just where money sat, and I never gave it much more thought than that.

If that sounds familiar, you are far from alone. The FDIC's national average savings rate is 0.38%, and some large traditional banks pay as little as 0.01%. Right now, a solid savings rate is generally anything above 3%. My kids, who had never even had a savings account before, had somehow figured that out. I had not.

Crunching the numbers

In my case, I moved $25,000 from an account paying 0.01% APY to one paying 4.1% APY. In the months since, that balance has earned roughly $507 in interest. Under the old rate, it would have earned about $1.25. That is a difference of about $506 in half a year, or around $1,022 over a full year.

Here is what the same kind of switch can mean at other balances over one year. The last column shows the new account’s earnings minus the old one’s. That is the number that matters.

Note: These estimates assume each APY stays the same for a full year with no deposits or withdrawals. Savings rates can change, so actual earnings will vary.

How the move went

The switch took less than 10 minutes because I handled everything online at once. I opened the new account and transferred the money out of my old bank.

The only delay was waiting for the transfer to clear. It took 3 days for the money to arrive in my new account, and there was nothing I could do to speed that up: Transfers between banks usually take 1 to 5 business days.

What I would tell other parents

If you have kept the same savings account for years and never checked the rate, it may be time. Look at the APY on your latest statement or in online banking and multiply it by your balance. If that number comes out to just a few dollars a year, you already have your answer. My only regret is not making the change sooner.

And when it comes to taking advice from your kids, I listen as long as it makes sense. In this case, it did. They did the homework, and they were right. Being a parent does not mean knowing everything.

The bottom line

My old account paid 0.01%, or about $2.50 a year on $25,000. The new one pays 4.1%, or roughly $1,025 a year. That is a difference of more than $1,000, and making the switch took less than 10 minutes online. I would never have done it if my teens had not asked about high-yield savings accounts.

If your savings account has been sitting untouched for years, check the rate. The only downside is that your kids might gently tease you about it. I did not mind.

Would You Spend Ten Minutes for $1,465?

That is roughly the yearly difference on $40,000 between the national average and rates of up to 4.00% available now. And ten minutes is not just a figure of speech. You only need to enter basic information, such as your name, address, Social Security number, and the account the money is coming from. But rates change with the market, which is why the only number that matters is the one available now. Compare the current top accounts here.

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Why We Like It

• Limited-Time Offer: Earn a $50 or $400 cash bonus¹plus a boosted up to 4.40% APY²on Savings (3.30% APY¹with +1.10% APY Boost) for up to 6 months when you open a new account and set up eligible direct deposits. Terms apply.
• No account, overdraft, or monthly fees.⁴
• Get your paycheck up to two days early with direct deposit.⁵
• Access additional FDIC insurance up to $3 million.⁶

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FAQs

What is a good savings account interest rate right now?

Anything above 3% APY is competitive at the moment. The FDIC national average is 0.38%, and top high-yield accounts pay around 4% or slightly more. Rates move, so compare options before choosing one.

How do I move money from one bank to another?

Open the new account, then transfer the money by linking the two accounts online or initiating an electronic transfer from your old bank. Allow 1 to 5 business days for the funds to arrive. Keep the old account open until you confirm the transfer is complete, especially if bills or direct deposits are connected to it.

Is a high-yield savings account safe?

Yes, as long as the bank is FDIC-insured or the credit union is NCUA-insured. Coverage is generally up to $250,000 per depositor, per bank, per ownership category. Make sure coverage applies before depositing, since not every high-yield account is insured.