The Sneaky Reason Big Banks Offer Savings Accounts With Low Interest Rates

Opening and keeping money in a savings account is touted as a good financial move. However, with the largest banks offering savings accounts with 0.01% in annual percentage yield (APY) in 2025, consumers often wonder if there is any sizable benefit over keeping their money in a standard checking account. Big banks offer these low rates not because they can't afford to pay more, but because of greed. Banks know they can offer lower savings APY and still attract customers because of their name recognition.

Big banks understand how people behave with their money and are able to offer dismal rates despite lesser-known competitors offering significantly better savings products. Most consumers are unaware that online banks and even credit unions have savings accounts with substantially higher APY rates. The large national banks that receive a majority of deposits rely on customers choosing the convenience of having multiple accounts at the same place over researching other products, opening new accounts, and moving their money around. While it may seem daunting to open a new bank account, many online banks provide high-yield savings accounts with rates up to six times higher than the national average, according to Bankrate. Meanwhile, certificates of deposit (CDs) can be better savings vehicles than a savings account at a big bank.

The low rates big banks offer may dissuade you from saving money; however, putting cash aside is still a good idea, whether it's to prepare for an emergency or for a large purchase. Luckily, there are plenty of places to put your extra money for better returns. The most comparable alternative is a high-yield savings account (HYSA). Typically offered by digital banks, HYSAs act like a traditional savings account but usually come with withdrawal limits, and you may not have the convenience of an ATM card. If you are looking to stay with a big bank, many offer CDs, which provide a fixed interest rate that is typically higher than their savings APY. However, there are pros and cons to opening a long-term CD savings account; notably, you must keep the money in the account for the specified length of time to avoid incurring penalties.

If you're saving for a large purchase in the future, investing your money can provide greater returns than CDs and HYSAs would. Investing in government bonds, for example, is extremely safe and provides guaranteed returns. Just don't redeem the savings bonds for at least five years to make the most on your investment. 

Meanwhile, if you're open to some risk, investing in the stock market can be the fastest way to build your savings. For instance, the S&P 500, which tracks the 500 largest U.S. companies, had annualized returns of 13.77% over the past five years and a 12.89% return over ten years, according to Investopedia. However, with stock market investments, returns are never guaranteed.