4 Biggest Mistakes You Can Make With Your Savings Account

Your savings account is an important part of your personal finances. It's where you'll likely keep your emergency fund and savings for any major upcoming expenses, such as a summer vacation or holiday gift shopping.

Because your savings account is so important, you want to get the most out of it and avoid any expensive mistakes. There are a few big mistakes, in particular, that could cost you quite a bit of money.

1. Settling for a low APY

If you have a savings account with a big bank, there's a good chance your money is earning a rock-bottom interest rate. That's never good, but especially right now, when there are high-yield savings accounts offering APYs of 4.00% to 5.00% or more. Big banks, on the other hand, pay as little as 0.01%!

Unfortunately, most Americans aren't taking advantage of the high rates that are currently available. Only about one-third (34%) have a savings account with a rate of at least 4.00%, according to research by The Motley Fool Motley Fool Money.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

Check your savings account's APY to see if it's offering a competitive rate. If your money is earning less than 4.00%, it's worth switching to one of the best high-yield savings accounts.

2. Not being consistent about saving

I know from firsthand experience how hard it can be to get into the habit of saving money. You tell yourself you want to get serious about saving. You plan to save what you can. But every month, your balance stays stuck in neutral.

The best way to save more is to make it a habit. You can save any amount you want -- $50 per month, $100, or whatever works for you. What's important is that you stick with it.

Also, instead of waiting until the end of the month to save money, do it right after you get paid. People call this "paying yourself first," and it ensures that you don't spend the money you were planning to save. To make this easy, consider setting up automatic transfers to your savings account so you don't need to do it yourself every month.

3. Paying account fees

With so many fee-free banking options available, there's no reason to pay a monthly fee for your bank account. If your savings account charges you any sort of maintenance fee, switch to one with no monthly fees. Online banks are a good option here, as many of them have no monthly fees or minimum balance requirements.

The same is true with your checking account. If it's costing you money, check out some top checking account picks to find one without any fees.

4. Putting all your extra money in your savings account

Saving money is a valuable habit, but that doesn't mean all your extra money should go in your savings account. It's also important to invest a portion of your money for retirement.

Even when savings account rates are high, they still don't come close to the kind of returns you can get by investing. The U.S. stock market goes up and down, but historically, it has delivered returns of about 10% per year.

To keep your finances well-balanced, make sure you're saving and investing a portion of your income. For example, you could save 5% of your income and invest 10%. If you earn $6,000 per month, you'd save $300 and invest $600.

These are all common mistakes people make with their savings accounts. The good news is that they're all easily avoidable. Now that you know about them, you can ensure that none of them end up costing you money.