82% of Americans don't use this kind of savings account that earns over 5% a year — here’s how much money you may be missing out on

When it comes to stashing cash, most Americans aren't taking advantage of one of the best accounts to grow their money and keep it accessible with nearly zero risk: a high-yield savings account.

In fact, a new CNBC Select and Dynata Banking Behaviors Survey found that 82% of the population doesn't utilize a high-yield savings account.

Why does that matter? It means that many may be losing out on free money. Some high-yield savings accounts currently offer interest rates higher than 5%, over 10x higher than the national average for traditional savings accounts, which is 0.46%.

American families have a median cash balance of $8,000 across different bank accounts, including checking and savings accounts, according to data from the Federal Reserve. If that money were to earn 0.46% APY in a traditional savings account, it would net just $37 in a year, whereas a high-yield savings account earning 5% APY would yield over $400 in interest payments in the same time period.

Below, we take a look at where Americans are keeping their savings, plus the best high-yield savings accounts on the market right now.

The majority of Americans — 57% — keep their savings in a traditional or regular savings account, according to the CNBC Select and Dynata survey, while only 18% utilize a high-yield savings account.

That could be because people see a savings account as just a place to park money, as opposed to growing it, so they're not shopping for the best rates, says Bill Van Sant, a CFP®, AIF® and senior VP and managing director at Girard® Investment Services. But it's important to pay attention to the savings environment, he says, especially in this economy.

"Not using a high-yield savings account is potentially hurting the earnings of these folks in a period with rising costs," he says. "Savings vehicles and bank products won't outpace inflation, but they can help to keep pace."

People are also potentially under-utilizing other smart saving strategies, according to the survey: Only 9% of Americans also have a brokerage account, 10% an IRA, 11% a CD and 11% a money market account.

Options like CDs and money market accounts can offer returns competitive or even better than a high-yield savings account. But the money in a CD is not as accessible as with a high-yield savings account. CD funds, for example, can be inaccessible anywhere from three months to five years, while high-yield savings restrictions may limit savers to six withdrawals or outgoing transfers per month. And money market accounts tend to require higher minimum balances than high-yield savings accounts do.

Stock market investments via brokerage accounts or IRAs can potentially generate higher long-term returns than high-yield savings accounts, but carry much more risk.

Traditional savings accounts have the same accessibility as a high-yield savings account, but there's significant opportunity cost in lower rates.

The bottom line is, in this economic climate, high-yield savings accounts are a smart way to take advantage of compounding interest (i.e. earning interest on top of interest), while keeping money accessible. Many of the best high-yield savings accounts on the market currently offer APYs of over 5%. For context, in 2021, when interest rates were around their lowest, these accounts offered APYs of around just 1%, while the average traditional savings APY was 0.07%.

You also want to look for things like zero monthly maintenance fees, low (or no) minimum balance requirements and FDIC insurance.

Here are a few high-yield savings accounts that offer 5% APY or higher, as well as other benefits:

The CNBC Select Banking Behaviors Survey of 1,151 Americans across the country was conducted online from Sept. 8, 2023 to Sept. 19, 2023 by Dynata. Survey respondents were nationally representative by gender, age, race and ethnicity using 2020 Census data. Women represented 50% while men represented 49% of respondents and spanned a wide variety of incomes. All those surveyed were 18 or older. The margin of error for the survey was +/-3%.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every banking article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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