Banks are finally raising their returns on savings accounts – digital banks, that is.
Although the Federal Reserve has been upping interest rates, those hikes largely haven't trickled down to consumers in the form of better savings yields. The average savings account is offering a paltry 0.9 percent annual return, according to Bankrate.com.
But some digital banks, such as Ally and Barclays, are offering closer to 2 percent. "It starts to become material for people," said Nick Clements, co-founder of financial website MagnifyMoney.
It sure does — at that rate, $25,000 would produce a return of $500 in a year. And you don't have to worry about market swings, of course, when your money is in a savings account. "Everyone should start comparing what they can get risk-free to what they're investing in," Clements said, adding that some bonds offer a return of just 3 percent.