The 3 Worst Places to Park Your Savings

Having savings is a wonderful thing. Saved cash can cushion you against financial emergencies and lay the foundations for wealth building. You can also use a savings account to put money aside for specific goals -- whether that's a much-needed vacation or a deposit on a house.

Some of the best savings accounts are paying APYs of over 4.00% right now. But unfortunately, many of us are not making the most of those high rates. A survey by Santander showed that over 80% of Americans haven't put money in high-yield savings accounts, money market accounts, or CDs.

Check out our picks for high-yield savings accounts -- it could take as little as 10 minutes to open one and translate into hundreds of dollars in interest earnings each year. If you're keeping your savings in any of the following three places, consider a change.

1. Checking account

Checking accounts are essential tools for making everyday payments and handling your money. The trouble is that, generally speaking, they don't pay interest. That makes them a suboptimal place to put your savings.

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 December 28, 2024. 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 December 28, 2024. 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 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.

If you have cash you don't need daily access to, such as your emergency fund, move it to an account that pays decent interest rates. Let's say you have $5,000 in savings and put it in a high-yield savings account that pays an APY of 4.00%. If it stays at that rate, you could earn $200 in a year.

The Discover® Online Savings doesn't charge monthly account fees or require a minimum deposit. It is also paying an APY of 3.75% right now. Click here to learn more about Discover's no-fee commitment and open an account.

2. Traditional savings account

The APYs on savings accounts can differ wildly. According to the FDIC, the average savings account APY is 0.42%. Some of the best high-yield savings accounts pay eight or nine times this rate, which can seriously boost your balance. On the flip side, some traditional savings accounts pay as little as 0.01%.

The main downside of high-yield savings accounts is that they are usually online only. Traditional savings accounts are often associated with brick-and-mortar banks that let you bank in person. Since many of us already do the majority of our banking by phone or online, switching to an online account that pays significantly higher rates makes financial sense.

Look for an account that pays a decent APY and also meets your banking needs. For example, it's worth shopping around to find a high-yield savings account that won't charge monthly fees. Also, pay attention to any minimum balance requirements and restrictions about how you can access your money.

In case you're worried, both traditional and high-yield savings accounts are generally covered by FDIC insurance.

3. So-called cryptocurrency "savings accounts"

Many people who buy cryptocurrency do so as an investment. They add crypto to their portfolio because they think it may perform well in the long term. Whatever you think about the pros and cons of crypto investing, there's a huge difference between investing and saving.

Savings are your safety net. It is nice to earn some interest on that money, but what really matters is that it will be there when you need it. Unlike investments, which are about building wealth for the long term, savings are about having accessible cash for the here and now.

Cryptocurrency is on the other end of the spectrum. It's a particularly risky type of investment and you could lose everything. That's partly because it is a new and relatively unregulated market. Not only that, but if you put your cash on a crypto savings platform, that money may not be protected if the platform fails.

That's why it's misleading to call them cryptocurrency savings accounts. Sure, they offer much higher APYs than you'd get at the bank. But they are investments, not savings. And you are taking much higher risks to earn those rates than you would with a bank.

It is one thing to invest a small portion of your portfolio in crypto. It is quite another to put your savings -- the money you'll need if you lose your job or face a medical emergency -- onto a crypto platform.

Key takeaway

The best place to park your savings is in a safe high-yield savings account that pays a decent APY. If you're confident you won't need to touch the money in the short to medium term, you might also consider opening a CD.

Don't leave your savings in a no- or low-interest account, whether that's checking or traditional savings. But don't take unnecessary risks with that money, either. I'm a big advocate of earning decent rates on your savings, but it should not involve taking huge risks with money that should be a safety net.