Here’s the #1 mistake we’re making with the money we’re saving

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How much is the money in your bank or credit union account earning?

New numbers show that on the whole, we’re only getting about a quarter of the bang for our buck that we could be getting!

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Noninterest deposits are the scourge of your finances

You would not believe how much money is out there earning absolutely nothing sitting in a bank account.

The Federal Deposit Insurance Corporation (FDIC) reports “noninterest deposits of around $3.2 trillion were equal to 26.3% of domestic deposits at U.S. banks in the second quarter,” according to The Wall Street Journal.

That means one in four of every dollar on deposit in the United States is earning a whopping interest rate of — you guessed it — 0.0%!

The fact is that being a creature of habit can be unnecessarily eating up our wallets. If you got used to banking with one of the nation’s four big banks in the past — Bank of America, Chase, Citi or Wells Fargo — chances are you still do.

Yet in an era of steadily rising interest rates, the big banks aren’t anywhere near keeping up by raising the interest rates they pay on your deposits.

Fortunately, people are starting to wise up. The Journal notes that customers moved more than $30 billion from noninterest deposits this year through June 30. It’s the first time that’s happened in over a decade, according to the FDIC.

Money expert Clark Howard recently championed the idea of taking money away from the big banks and moving it to online banks.


“Without lifting much of a finger, you can take 0.0% up to around 2%. And that 2% is only going to go up from there,” the consumer expert says.

“All the action right now for any idle cash you have is with the online banks.”

For example, CIT Bank is offering 2.30% APY on its Savings Builder account. To qualify for that rate, you need to either have an account balance of at least $25,000 or make at least one deposit of $100 or more faithfully each month that you don’t have $25,000 on deposit.

And that’s just one example of what’s available in the marketplace. Click here to see some other online banks that Clark likes!

(Editor’s note: You can survey the entire marketplace of online banks and their interest rates at

Addressing some common questions about online banks

Recently, we heard from one reader who basically said, “The interest rates are sure tempting, but with cyberattack worries are the online banks secure? And how do I know when I open an online bank account that I’m not sending my hard-earned money to some hacker who lives in his parents’ basement?”

Those are reasonable questions, but they’re both pretty easily addressed.

First, a word about security. The de facto standard level of encryption for banks and other financial institutions has become 256-bit AES or Advanced Encryption Standard.

Of course, most people don’t know what that means. So you can read more about the science behind “bank-level encryption” here.

And second, if you ever have a question about the legitimacy of an online bank, just use the free FDIC Bank Find tool.


Simply enter an online bank’s name and you’ll get a search result with their FDIC status (it should be active) and their FDIC number — two data points that show an online bank is the real deal.

FDIC Bank Find tool


Don’t let one in four of every dollars you have on deposit earn 0.0%! It’s simpler than ever today to start earning much more.

“You can easily earn 2% or more on your savings without any real effort,” Clark says. “You don’t even have to dump your giant monster mega-bank. Keep your checking account there with only what you need to pay your bills, and then have everything else earning interest in an online bank.”

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