Situation Analysis
Even interest rates are low in a typical savings account it doesn't mean that you shouldn't save. Continue saving.

Low Interest Rate on Savings

Low Interest Rate on Savings

I have some money in a savings account but the interest rate on the account is very low. It seems that the balance is hardly growing at all. I know that interest rates are currently very low, but is there something I can do to make the balance grow faster?

First, congratulations on having saved some money. Many people have very little or no savings even though many advisors suggest that people should have liquid savings in an emergency fund to cover 3, 6 or 9 months of living expenses.

Second, yes, interest rates are very low. In fact, interest rates have generally been falling for over 30 years. This has especially been true since the financial crisis in 2007 and 2008. Interest rates will probably rise eventually, but no one knows when that will occur.

Finally, let's address your question of what, if anything, you should consider to make your savings grow faster.

Along with trying to find a way to earn more on your savings, you must consider the safety associated with your savings. There is an old saying that when something looks too good to be true, it probably is too good to be true. Be very wary of promises of high rates associated with investments or accounts that are different from those you are familiar with and understand. Remember that not only do you want a return on your money, you want a return of your money. Staying with accounts from a bank or credit union that are insured by the FDIC or NCUA makes good common sense.

Until interest rates rise, the best way to increase the value of your savings is to establish a consistent savings habit. One of the easiest ways to establish a savings habit is to participate in your employer's 401(k) plan. Funds are withheld from each paycheck and deposited into your account. In addition, if your employer matches part of your contribution, you accumulate even more. A second way to consistently save is with an automatic savings transfer program with your financial institution. You decide how much and when you want funds transferred from your checking account into a savings account. You can also use a payroll deduction plan from your employer and get the same results.


  • Interest rates are low and no one knows when the rates may increase.
  • Use common sense when choosing where to put your savings. Your savings should be the most conservative part of your financial assets and making sure that they are insured by the FDIC or NCUA is important.
  • Saving more is the one thing you can control and a consistent savings habit will help your savings balance grow.

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