Here’s what could happen if you leave your money in a savings account

Putting cash in a savings account is reassuring, but the convenience alone can come at a cost. Between inflation and the rising cost of living, any account that earns less than 2% or 3% loses value over time. With the national average savings rate reaching just 0.40% in November 2025, you could see your balance of purchasing power eroded month after month.

Having a strong savings cushion is key to financial health, but how you save matters. Below, we’ll weigh the pros and cons of keeping your money in a savings account and explore smarter alternatives that could serve you better.

What a regular savings account really offers

Traditional savings accounts excel at two things: immediate access (i.e., “liquidity”) and Federal Deposit Insurance Corporation (FDIC) insurance, which insures up to $250,000 per depositor, per bank against loss.

A trade-off is an opportunity cost. Keep $10,000 for a year in the bank at 0.50% interest and you will only earn $50 in interest (before taxes); If inflation averages 2.5% during the same year, your real purchasing power decreases by more than $1,200. Sure, you avoid market volatility, but slow leakage of value is guaranteed.

What could happen to savings balances that have been ignored for a long time?

When you leave your savings account idle — which can be up to six months in some cases — you could end up paying fees without even realizing it. The bank or credit union may end up charging you fees, and that could deplete your savings. And if your balance drops, your bank may have rules that allow it to charge you another fee for not maintaining the minimum balance required to earn interest.

After that, if it’s been inactive for a longer period of time, your account may be closed and your funds turned over to the state. This process is known as delegation. Your funds will not be completely lost, but it may be difficult to access them again and take some time to recover.

You can check to see if you have any money waiting for you by going to the National Association of Unclaimed Property Adjusters website.

Upgrade to a high-yield savings account

Online banks, credit unions and fintech companies can be a smart alternative to depositing cash, as they can offer up to 5.00% annual yield on savings accounts (as of December 2, 2025) – more than 11 times the traditional bank average. Interest rates are usually high enough to keep up with inflation (and some), but they can change at any time.

Long-term investing increases the potential for long-term growth

For savings goals after five years or more, even attractive savings rates often lag the stock market. For example, the S&P 500 Index, which is used to track overall stock market gains and losses, has averaged about 10% per year over time. Investors can easily access it using a low-cost exchange-traded fund (ETF).

At this pace, $10,000 would grow to about $26,000 in 10 years, nearly twice as much as a 4% high-yield account, which in turn would earn about 8 times the interest of a low-yield savings account. Here are the numbers for various rates of return for the stock market (using their historical average), savings and high-yield CDs, and the average U.S. savings account:

10% annual interest (historical stock market average):

• Final amount: $25,937.42
• Interest earned: $15,937.42
• The original money is multiplied by: 2.59x

4% APR (High Yield Savings/CDs)

• Final amount: $14,802.44
• Interest earned: $4,802.44
• The original money is multiplied by: 1.48x

0.5% annual interest (average savings account)

• Final amount: $10,511.40
• Interest earned: $511.40
• The original money is multiplied by: 1.05x

However, there is a problem: risk. Market values ​​are not guaranteed and can only go down when you need your money. Therefore, a healthy emergency stash (experts recommend setting aside enough to cover expenses for three to six months or more) and emotional discipline are key requirements.

Bottom line

If you leave your money in a savings account, you will see its purchasing power eroded by inflation. This means that your money will be “less valuable” over time. Furthermore, you will miss out on opportunities in high-yield savings accounts, CDs, bonds, and the stock market that have historically produced higher returns.