Week 1: Earn more on your savings

Welcome to Business Insider’s January Money Challenge. Ready to build wealth in 2025? Start here.

This past year was a great one for savings accounts, as anyone earning 5% on their cash knew well.

But after three consecutive interest rate cuts by the Fed, the days of 5% are probably over. That’s not quite the terrible news it seems. Let’s put things in perspective: 

When you look at the wide range of savings accounts available, the average one earns 0.42% APY. Even if your 5% falls down to, let’s say 3%, you’re still earning more than seven times the average — just for leaving your cash there until you need it.

You’ll see many of the highest rates come from digital banks that compete for your business by offering you money to keep your money with them. In most cases, the savings accounts they offer function exactly like the ones from legacy banks. They just have better rates.

One place high(ish) rates are still hanging on is in the best CDs, which lock in your interest rate for up to five years. CDs also lock in your money, which means they’re not a good choice for cash you’ll need immediately, or for your emergency fund. It’s worth noting, however, that some of the highest rates currently available are on the shortest terms (think three to six months).

Your challenge:

Run your numbers through our compound interest calculator to see how much a high-yield savings account could earn in the next few years (and maybe even compare it to your current account’s rate). 

As a bonus, add in a monthly contribution and see how much faster your savings grow when you put aside another $25, $50, or $100 a month (this is easy to automate through your bank’s website or app). Impressed? Choose a savings account that will make those numbers a reality — you won’t even have to make a phone call.

If you already have an account and rate you love, here’s the next step: Make those theoretical automatic contributions a reality. Add a small amount (shall we say $25?) to whatever you contribute automatically each month, and watch that balance grow.

Next Steps: Sponsored by Raisin

Raisin allows users to create a no-fee login in minutes and spread their savings across a network of more than 70 banks and credit unions, all with a single password. Raisin’s partner banks consistently offered some of the highest rates throughout 2024, saving their users from opening new accounts to chase high yields. Get started with Raisin.

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