How to earn more interest on your savings account

Apr 4, 2023, 11:12 PM | Updated: 11:13 pm

SALT LAKE CITY — The Federal Reserve recently raised interest rates for the second time this year, and that’s on top of seven rate increases last year. Those increases have boosted the rates our money earns us as it sits in our bank accounts, but not all increases on savings rates are equal.

Every time the Fed ticks up its benchmark interest rate, the interest we pay on loans and credit cards increases. So does the rate banks pay us to hold onto our money.

“Not as fast as you might think,” said Ken Tumin, senior industry analyst with LendingTree. “Not as fast as loan rates, credit card rates. But they have been going up still.”

Tumin said smaller banks and online banks typically pay out more. But many savers tell LendingTree they will stick with the larger banks — thank you very much.

“We found that 31% still favor the large national banks as their primary institution for their banking,” he said. “That’s a lot of people that are losing out quite a bit because of that.”

To see how much, we looked into rates.

Let’s say you want to stash $5,000 in savings. Bank of America will pay 0.01%. The same goes for Chase. Wells Fargo offers a 0.25% APY on that amount in savings.

Compare those numbers to Bank of Utah’s iSave, which gets you 0.65%, or an America First Credit Union account at 1.45%. And online-only bank SoFi, says it will offer a 4% rate for savings.

A few percentage points on the interest rate makes a real difference. Stashing $5,000 for a year at 0.01% will earn you just 50 cents in interest. But at 4%, you’ll get $203.71.

Tumin said if you are getting a skimpy return on your money, shop around. Look for websites that compare rates, fees, and customer service.

“Also, look what other people are saying about them, and reviews for the banks,” Tumin advised. “You can compare different banks and credit unions to see what they provide and what kind of service they provide. Information is out there. You just have to go through it and decide what’s most important.”

But between our direct deposited paychecks and all those streaming services, utilities, and other automatic bills, switching can get really tedious.

“Often banks don’t make it easy to close the accounts,” Tumin said. “We try to close it; they try to talk you into staying.”

Tumin said to at least open a new savings account and link that to your old checking account.

“Instead of trying to do a total switch, just open up that online savings account and link it to your existing checking account and at least start getting some more savings, more interest on your savings at least,” he explained. “Then you can migrate slowly. And you can benefit the quickest from the higher rates.”

To be clear, a higher savings rate will not exactly have you rolling in cash, but when you’re trying to bust inflation, every little bit counts.

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How to earn more interest on your savings account