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Banking

The 4 signs you need to start looking for a new savings account

Learn what to look for before moving your money to a new account.

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wagnerokasaki | Getty

Your savings account should do more than just keep your money safe (though it needs to do that, too) — it also needs to help your money grow so you can more quickly meet financial goals like saving for a down payment on a home or building your emergency fund.

But it's not always obvious when your current savings account isn't passing muster and you need to make a switch. Below, CNBC Select and a certified financial planner list 4 signs that signal it's time to consider a new account.

Your current savings account isn't earning much interest

The average savings account interest rate is currently 0.37% according to the FDIC. But, it's possible to earn 5% APY or more with some accounts. "Interest rates are huge," says Nilay Gandhi, a certified financial planner and senior wealth advisor at Vanguard. While Gandhi cautions against focusing solely on your account's APY when deciding if it's time to ditch it, it's an important consideration. "If you're able to seek out 1% or 1.5% additional, then it makes a whole lot of sense," he says. "You're paying yourself first that way."

Some of CNBC Select's top picks for high-yield savings accounts include LendingClub's High-Yield Savings (for its high APY and no minimum balance requirements or monthly fees) and UFB Secure Savings (for earning a high APY and also offering a free ATM card and mobile check deposits).

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC
  • Annual Percentage Yield (APY)

    5.00%

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

    None

  • Maximum transactions

    None

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes

Terms apply.

UFB Secure Savings

UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.
  • Annual Percentage Yield (APY)

    Up to 5.25% APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to 0.20% APY on savings

  • Minimum balance

    $0, no minimum deposit or balance needed for savings

  • Fees

    No monthly maintenance or service fees

  • Overdraft fee

    Overdraft fees may be charged, according to the terms; overdraft protection available

  • ATM access

    Free ATM card with unlimited withdrawals

  • Maximum transactions

    6 per month; terms apply

  • Terms apply.

You're paying multiple fees on your account

If you're paying fees to maintain your savings, it might be time to look for a new account.

"Many banks or institutions will have costs, whether it's transactional costs or account costs," Gandhi says. "We're always focused on fees and how you can make those less so you can keep more in your pocket."

The average American pays $7 per month in fees, totaling $84 per year. From out-of-network ATM fees to monthly maintenance or service fees, these extra expenses can eat into your savings each month.

There's good news, however: these fees aren't necessary. Many institutions also offer fee-free savings accounts, including Marcus by Goldman Sachs, which doesn't require a monthly fee or a minimum balance.

You can't easily access your cash

Easy access to the funds in your savings account is a must, and if you're having trouble getting your money then you might consider a switch.

"What's the access to the liquidity?" Gandhi says. "Does it require you to go in person to a bank, or can it be withdrawn from an ATM?" Look carefully at the ATM network and availability, whether or not ATM fees are reimbursed, and even whether there's a debit card available.

One of CNBC Select's favorite high-yield savings accounts, Ally Bank's Online Savings Account, doesn't charge any monthly maintenance fees and offers fee-free ATM access within the Allpoint network and $10 per statement cycle for other ATM fees.

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Your money exceeds the deposit insurance limits

If you're worried about your money exceeding the $250,000 Federal Deposit Insurance Corporation (FDIC) insurance limit, it might be worth opening another bank account. Working with a separate FDIC member institution is one way to get more coverage for your money. You can check whether your bank or institution is a member with FDIC's BankFind tool. 

It's also possible to find accounts that offer more coverage than the $250,000 FDIC limits. For example, Wealthfront's Cash Account offers $5 million for individual Cash accounts ($10 million for joint accounts) through partner banks. Betterment's Cash Reserve and SoFi's Checking and Savings also offer more than $250,000 worth of coverage.

Generally offered by fintechs and online banks, these accounts spread deposits across a network of FDIC-insured banks. However, you should review the banks used to hold your deposits, and double-check to make sure you don't already have deposits there to ensure every dollar is covered. 

Bottom line

If your savings account isn't serving your purposes, opening a new one could be a smart move. Start thinking about getting a new account when you're not able to easily access your cash, earn enough interest, or when you're paying fees or have deposits that exceed the account's FDIC limits.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Find the right savings account for you
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Help your money grow by finding the savings account that offers the best rates and features for you
Chime
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Chime offers online-only accounts that minimize fees plus, get paid up to 2 days early with direct deposits