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Disadvantages of High-Yield Savings Accounts

Are there actually downsides to a savings account?

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By

Bethany Hickey

Edited by

Holly Jennings

Updated

Fact checked

Savings accounts are one of those accounts that almost everyone has. They’re low maintenance, often don’t have monthly fees, and most importantly, they earn interest on your balance. However, if you’re trying to save up for retirement or want a return over 0.38%(1), you may need to expand your horizons.

3 disadvantages to savings accounts

Savings accounts are great, but there are some things they’re just not designed for.

1. Rates can change at any time

While savings accounts earn interest, the amount you earn can fluctuate because they typically have variable interest rates. Banks and credit unions can adjust your savings account interest rate at any time, usually in response to market conditions. Check your rate periodically to make sure you’re earning the best APY you can get.

2. Lower rates than some options

Compared to other options like money market accounts or CDs, savings accounts tend to have lower interest rates. The FDIC reports that money market accounts have an average rate of 0.63%, and 12-month CDs have an average rate of 1.76%, while savings accounts have an average rate of just 0.38%(1).

Returns can also be much smaller than other options, like investing, but of course, that comes with more of an inherent risk than a federally insured deposit account.

While you can find high-yield savings accounts with rates well above 4% APY, that rate isn’t guaranteed to stick around forever.

3. Withdrawal limits are common

For the most part, banks and credit unions only allow you to make up to six withdrawals per statement period from your savings account. While you can deposit as much as you’d like, your withdrawals will likely be limited each month.

This limitation is partially by design, since savings accounts aren’t meant for spending. Some savings accounts have no withdrawal limitations, such as the Marcus Online Savings Account and the savings account from the hybrid SoFi® Checking and Savings account.

So, are savings accounts not worth it?

While savings accounts aren’t perfect for every financial situation or designed for spending, these deposit accounts still have significantly more pros than cons.

Savings accounts are low-maintenance deposit accounts protected by FDIC or NCUA insurance, earn interest, are widely available and are great places to store everyday savings or an emergency fund. At most banks and credit unions, you can link your checking and savings accounts together for easy transfers between them — either to withdraw savings you need quickly or to transfer funds you want to save.

No bank account is perfect, and each has unique pros and cons. However, savings accounts are still extremely useful and essential bank accounts.

Compare top savings accounts

Narrow down top savings accounts by APY, monthly fees and perks. For a closer comparison, tick the Compare box on multiple accounts to see the benefits side by side.

6 of 19 results
Finder Score Account type Annual Percentage Yield (APY) FDIC or NCUA insured amount Minimum balance to earn APY Minimum deposit to open
9.2 Excellent
Cash management account

3.30%

Up to $250,000
$0
$0
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9.4 Excellent
Cash management account

3.55%

Up to $8M FDIC insurance
$1
$1
New clients earn can earn 4.45% APY. New clients get a boosted APY from 3.55% to 4.20% APY for 3 months on up to $150,000. Can also earn ongoing 0.25% APY increase for monthly direct deposit of $1,000 or recurring deposits of $2,500 for a total 4.45% APY with both APY boosts. T&Cs apply.
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Compare product selection
8 Great
Traditional savings
Up to

3.75%

Up to $250,000
$0
$100
Earn up to 4.35% APY. Get a 0.60% boost to the standard Platinum Savings APY for six months. The boost applies when an eligible customer opens a new Platinum Savings account or enrolls a qualifying Platinum Savings account using promo code BOOST60, subject to promotion terms. APYs are variable and may change. T&Cs apply.
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Compare product selection
SoFi® logo
9.2 Excellent
SoFi Checking and Savings
9.2 Excellent
Traditional savings,Checking
Up to

3.30%

Up to $250,000
$0
$0
Earn up to 4.40% APY on savings and $50 or $400 with direct deposit. Open a new SoFi Checking and Savings account by 31 December 2026, set up eligible direct deposit within 60 days, and maintain direct deposit for six months. 1.10% Boost on Savings APY to up to 4.40% for up to 6 months on new accounts. T&Cs apply.
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Live Oak Bank logo
9.7 Excellent
Live Oak Bank through Raisin
9.7 Excellent
Traditional savings

4.10%

Up to $250,000
$0.01
$0
Up to $1200 with code SUMMER26. T&Cs apply.
View details
Compare product selection
Robinhood logo
Not scored yet
Robinhood Banking
Not scored yet
Cash management account

3.60%

up to $2.5 million
$0
$0
View details
Compare product selection
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Showing 6 of 19 results

What is the Finder Score?

The Finder Score crunches over 250 savings accounts from hundreds of financial institutions. It takes into account the product's interest rate, fees, opening deposit and features - this gives you a simple score out of 10.

To provide a Score, Finder’s banking experts analyze hundreds of savings accounts against FDIC-reported national averages as a baseline. Accounts with rates well over the national average are scored the highest, while accounts with rates well below are scored low.

Read the full breakdown

Alternatives to a traditional savings account

Aside from a traditional checking account — another essential bank account designed for spending — there are some other accounts to check out that can complement your savings or be an alternative option.

If you want spending abilities, higher returns or the ability to really lock your funds away for maximum earnings, consider these other great options:

  • Certificates of deposit. If you’ve squirreled away a nice chunk of cash and already have a full emergency fund, a certificate of deposit (CD) can be a great way to grow idle cash. On average, CDs have higher interest rates than a typical savings account, and they’re also FDIC or NCUA insured.
  • Money market accounts. These accounts often come with a debit card for spending and earning interest. On average, money market accounts earn 0.63%, which is higher than the 0.38% average for savings accounts(1). Money market accounts are also covered under deposit insurance.
  • Cash management accounts. Often offered by brokerages, these cash management accounts are designed to grow uninvested funds passively. They commonly offer high FDIC insurance in the millions, thanks to sweep programs, and earn decent interest rates.
  • Interest-bearing checking. While not super common, there are checking accounts that earn interest. These accounts usually have balance or deposit requirements to earn the rate, but they’re a solid alternative if you want to spend cash while it grows passively.

Bottom line

Savings accounts have more advantages than disadvantages, but they still have downsides to consider. If you want an account that earns interest and comes with a debit card, look for a money market or interest-bearing checking account. If earnings are your top priority, then a CD or investment account might be more your speed.

Learn more about savings accounts and compare your options.

Holly Jennings's headshot
To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.
Bethany Hickey's headshot
Written by

Banking editor
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Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio

Bethany's expertise
Bethany has written 477 Finder guides across topics including:
  • Personal finance
  • Banking
  • Auto loans
  • Insurance
  • Cryptocurrency and NFTs
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