4 ms·

Kind of a stupid statistic, how much people have in their savings account. With interest rates so low, a savings account is basically worthless. The more intere

Kind of a stupid statistic, how much people have in their savings account. With interest rates so low, a savings account is basically worthless. The more interesting question is how much they have saved in total, across all accounts and investments.

jp555 10y ago
Right on, and if you include account fees, it's equivalent to disturbingly high negative interest.
- mattnewton 10y ago
  Not to mention inflation..
- djrogers 10y ago
  If you've got account fees on your savings account you need a new bank. Hint - just because there's one on every corner and their headquarters is a 40 story building downtown doesn't mean it's a good bank. Local banks and credit unions are almost always better for you and your money..
  - jp555 10y ago
    Good advice. Less competition up here in Canada but there's still zero-fees options if you shop around.
  - pilom 10y ago
    There are also online-only banks (Ally and CapitalOne360) that offer great rates and no fees but they can't handle cash deposits.
- logfromblammo 10y ago
  For instance, Wells Fargo's Way2Save has 0.01% interest (compounded daily at 0.000000274%), and a $5 monthly service fee for minimum daily account balances less than $300. So if you deposit $299 on 1 January, and are over 18, you end up with $239 on 31 December. Yay for that -20% interest rate. So make sure you deposit that extra $1 to hit $300. But if the daily-compounded interest is rounded to the nearest $0.01, you don't even get any interest unless you have a balance of $18250.91 or greater. In order to get the minimum possible $3.65 daily-compounded interest on a balance of $300, the APY has to be at least 1.2167%. Just be honest and say the rate is 0%, man. It's no wonder all those Wells Fargo employees had to commit fraud to open more of those accounts. PT Barnum's maxim notwithstanding, there just aren't enough suckers in the world to open a new Way2Save account of their own volition. My spouse recently suggested that we open savings accounts for the kids, so I pointed out the abysmally low effective interest rates on accounts . We're opening investment accounts for them instead. Kids, the way to save is to dump everything in index funds and forget it's there.
JoshTriplett 10y ago
In fact, these days some checking accounts pay more interest than a savings account. And even if they don't, not much point in keeping a separate savings account if it doesn't pay any better than a checking account. (Other than for organizational reasons.) That said, despite the savings-account-specific question, I suspect the statistics would look quite similar if you made the question less account-type-specific and just asked how much money people had saved away.
- pmoriarty 10y ago
  There are security reasons as well. If you do a lot of transactions from your checking account, and only occasionally transfer from savings to checking, then the former is more likely to be compromised than the latter. This difference increases if you use your checking account online, at via third party pin entry devices, or even at your bank's ATMs while only accessing your savings account from a teller in your bank. All of the former methods of access can be compromised and you can lose the contents of your checking account -- which would be limited if you didn't keep all of your money in your checking account. Unlike credit cards, bank accounts aren't protected against theft or fraud, so the risk of theft is a real possibility that could cost you.
  - JoshTriplett 10y ago
    True. On the other hand, if the only thing you ever use your checking account for is to receive direct deposits and pay your credit card bill, then adding a savings account to that doesn't really improve your security. I'd definitely recommend not doing any transactions from the same account that you keep most of your money in; have a layer of insulation. Don't use a debit card or a bank-account-backed "credit" card.
dudul 10y ago
The difference may be with how available the money is. Having money on an IRA is important, but cannot really be used in case of emergency.
- AnimalMuppet 10y ago
  IIRC, it can, at least for a medical emergency. Of course, you have to pay it back, with interest...
- marcoperaza 10y ago
  Right, but given the worthless interest rates on saving accounts these days, a lot of people probably have their emergency funds in checking accounts. And if you own stocks and such, those are pretty liquid.
- pilom 10y ago
  Actually if it is in a Roth IRA, you can withdraw all of the principal (but none of the gains) at any time, for any reason, tax and penalty free.
deleted 10y ago
[deleted]
ChadMoran 10y ago
I do. I use Ally banking which is 1%. Great place to store a house down payment.
- fredleblanc 10y ago
  I just did exactly this myself. So many people say that you'll make so much more in the market, but 1% guaranteed feels so much better than maybe something more. And we got a new house in the end!
  - ChadMoran 10y ago
    Unless you're looking to buy a house in 5+ years putting your down payment in the market is super risky. When you have $100k+ in a savings account $1k/yr isn't bad.

jp555 10y ago

Right on, and if you include account fees, it's equivalent to disturbingly high negative interest.

mattnewton 10y ago
Not to mention inflation..
djrogers 10y ago
If you've got account fees on your savings account you need a new bank. Hint - just because there's one on every corner and their headquarters is a 40 story building downtown doesn't mean it's a good bank. Local banks and credit unions are almost always better for you and your money..
- jp555 10y ago
  Good advice. Less competition up here in Canada but there's still zero-fees options if you shop around.
- pilom 10y ago
  There are also online-only banks (Ally and CapitalOne360) that offer great rates and no fees but they can't handle cash deposits.
logfromblammo 10y ago
For instance, Wells Fargo's Way2Save has 0.01% interest (compounded daily at 0.000000274%), and a $5 monthly service fee for minimum daily account balances less than $300. So if you deposit $299 on 1 January, and are over 18, you end up with $239 on 31 December. Yay for that -20% interest rate. So make sure you deposit that extra $1 to hit $300. But if the daily-compounded interest is rounded to the nearest $0.01, you don't even get any interest unless you have a balance of $18250.91 or greater. In order to get the minimum possible $3.65 daily-compounded interest on a balance of $300, the APY has to be at least 1.2167%. Just be honest and say the rate is 0%, man. It's no wonder all those Wells Fargo employees had to commit fraud to open more of those accounts. PT Barnum's maxim notwithstanding, there just aren't enough suckers in the world to open a new Way2Save account of their own volition. My spouse recently suggested that we open savings accounts for the kids, so I pointed out the abysmally low effective interest rates on accounts . We're opening investment accounts for them instead. Kids, the way to save is to dump everything in index funds and forget it's there.

JoshTriplett 10y ago

In fact, these days some checking accounts pay more interest than a savings account. And even if they don't, not much point in keeping a separate savings account if it doesn't pay any better than a checking account. (Other than for organizational reasons.) That said, despite the savings-account-specific question, I suspect the statistics would look quite similar if you made the question less account-type-specific and just asked how much money people had saved away.

pmoriarty 10y ago
There are security reasons as well. If you do a lot of transactions from your checking account, and only occasionally transfer from savings to checking, then the former is more likely to be compromised than the latter. This difference increases if you use your checking account online, at via third party pin entry devices, or even at your bank's ATMs while only accessing your savings account from a teller in your bank. All of the former methods of access can be compromised and you can lose the contents of your checking account -- which would be limited if you didn't keep all of your money in your checking account. Unlike credit cards, bank accounts aren't protected against theft or fraud, so the risk of theft is a real possibility that could cost you.
- JoshTriplett 10y ago
  True. On the other hand, if the only thing you ever use your checking account for is to receive direct deposits and pay your credit card bill, then adding a savings account to that doesn't really improve your security. I'd definitely recommend not doing any transactions from the same account that you keep most of your money in; have a layer of insulation. Don't use a debit card or a bank-account-backed "credit" card.

dudul 10y ago

The difference may be with how available the money is. Having money on an IRA is important, but cannot really be used in case of emergency.

AnimalMuppet 10y ago
IIRC, it can, at least for a medical emergency. Of course, you have to pay it back, with interest...
marcoperaza 10y ago
Right, but given the worthless interest rates on saving accounts these days, a lot of people probably have their emergency funds in checking accounts. And if you own stocks and such, those are pretty liquid.
pilom 10y ago
Actually if it is in a Roth IRA, you can withdraw all of the principal (but none of the gains) at any time, for any reason, tax and penalty free.

deleted 10y ago

[deleted]

ChadMoran 10y ago

I do. I use Ally banking which is 1%. Great place to store a house down payment.

fredleblanc 10y ago
I just did exactly this myself. So many people say that you'll make so much more in the market, but 1% guaranteed feels so much better than maybe something more. And we got a new house in the end!
- ChadMoran 10y ago
  Unless you're looking to buy a house in 5+ years putting your down payment in the market is super risky. When you have $100k+ in a savings account $1k/yr isn't bad.