Are your savings earning their full potential?

Published 5/2/2023

The materials and information on this website are for informational purposes only and should not be considered legal, tax, or financial advice. Brilliant Bookkeeping LLC is not responsible for any actions taken upon reading this information. Brilliant Bookkeeping LLC does not earn a profit from the links presented in this article. The information below is an opinion; all opinions are our own.

Whether you have a small business or just personal accounts, most of us have a savings account at our bank. Unfortunately, a lot of banks pay under 1.00% APY on their savings accounts. At my previous bank, the APY on my savings account was 0.01%. This means that for every $1,000.00 you are earning about $0.10 annually (depending on how interest is calculated – see article below).

Currently, there are a few institutions that offer high APY rates on savings accounts. This means that you’ll earn significantly more on your savings – the higher the APY the more you earn in interest, generally. Again, it depends on how the institution calculates your interest: whether it is compounded daily, monthly, or not at all (simple interest). This information can usually be found in your savings account disclosure or by reading the fine print when opening a new savings account.

Money Market accounts and CD’s both usually have higher interest rates but more restrictions (i.e., you may not be able to withdraw your funds without penalties for a period of time).

Online banks tend to offer higher APY rates than brick and mortar institutions because there is a lower overhead cost for operating them. Whichever institution you choose, we recommend choosing one that is FDIC insured (read about why FDIC insured is important here).

Two banks I have experience with are listed below. Both offer online savings accounts. Both are also FDIC insured.

Marcus by Goldman Sachs: Offers high yield Online Savings accounts for personal use (current APY is 3.90% as of 5/2/23). This is a great starter option as it has a $0.00 minimum balance, unlimited withdrawals, and no fees or penalties. 

Live Oak Bank: Offers high yield personal savings (current APY is 4.00% as of 5/2/23), and business savings (current APY is 4.00% as of 5/2/23). Both accounts have minimum balance requirements and offer no maintenance fees but do charge for other fees (such as stop payment or low balance fees).

(Click here for an article on how APY is calculated)

TL DR: We recommend checking what your current APY on your savings account is, and then shopping around to see if you can find a better option so your money is earning more interest for you. When shopping around, think about what is important to you, do some research on prospective institutions, and be sure to ask questions before choosing an institution to move your savings to.

Stay Balanced!

-Brilliant Bookkeeping Team