Why You Can’t Expect To Get Rich From Your Savings Account


When you were ten years old, getting your hands on a $20 bill made you feel rich. You could walk into a toy store and buy virtually any decently priced toy and still have money left over for ice cream. As an adult, a $20 bill isn’t so exciting; it takes three of them just to fill your gas tank.

Times have changed and money doesn’t go as far as it once did. Instead of eagerly spending $20 bills, as adults we tuck them away in a savings account or a money market account and we still don’t feel rich. It would take a lot of money to feel as rich as we did when we were ten years old, but it’s not impossible. However, if you think stuffing money into your savings account will make you rich, think again.


Savings accounts benefit banks

Banks need your money, and the best way to get it is to convince you to load up your savings account. To you, the money sits there, untouched, and is available anytime you need it. In reality, your bank is “borrowing” your money every day for their own purposes. Putting money into a savings account is essentially giving the banks a loan, but unlike the banks, you don’t get to charge interest. 

Interest rates offered by banks have been declining over the years, and some have eliminated interest entirely. If you’re lucky, your bank will give you interest, but don’t count on it being more than 1%. At 1%, a balance of $1,000 will yield $10. That’s not inspiring. However, that doesn’t mean you shouldn’t build a savings account. The interest earned from a savings account won’t make you rich, but it will save you in times of financial stress.

If you can earn interest, take your free money!


You need a savings account anyway, so you might as well open an account that earns interest. You’re turning down free money otherwise. You may only earn a few hundred dollars per year, but that’s free money to invest in other ways that will provide a better return.

Interest rates for savings accounts are generally low, but some banks offer a bonus interest rate for customers who meet certain criteria. For example, your bank might reward you for not making any withdrawals or for depositing a specific minimum amount of money into your account each month. 

If you don’t have big bucks to invest, do this

If you don’t have the funds required to invest in CDs or the stock market, start earning interest in every way you can. If your savings account is earning you pennies, there are other ways.

Find a credit union that offers checking accounts with cash back for purchases. The amount you can earn will max out, but the money you earn will add up quickly. For example, even if you only earn $30 each month, that’s $360 in free cash each year. After about three years you can take that money and invest it into a CD and start earning real interest. After several more years, you’ll have even more money to invest and eventually you’ll be earning truly passive income. 

Although CDs are popular, talk to your bank and ask them about alternative forms of investing like dividend paying stocks. For instance, companies like Verizon and ExxonMobil pay quarterly dividends that are much higher than the average CD rate. It’s a viable option when you don’t have much cash to invest.


Many people invest directly in the stock market, but if that seems overwhelming, skip it. Although many people will say newbies can invest in the stock market with the right help, that only applies if you have the time and energy to spend learning how it all works. If you’ve got a job or a family to take care of, you’re probably pressed for time. 

Start investing wherever you are

If all you can do right now is create a plan to save $500 over the next two years to invest, that’s a start. You have to start wherever you are. Don’t get discouraged just because you can’t invest immediately or if you can only invest a small amount. Every action makes a dent toward creating your financial future.

TUT Staff
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