Is Your Bank Returning The Favor?


Note: This post was updated on October 14, 2021

Banks make money in a few different ways. One of them is by charging you interest or fees for the services they provide. Another major way banks make money is from YOUR money.

In other words, when you deposit money in a bank, the money doesn’t just sit there. It gets pooled with other deposits from millions of customers and is sent to work!

The money is invested in different things and generates billions of dollars for the bank. In return for “holding” your money, most brick and mortar banks will pay you a few pennies.

You Vs The Bank

Back in the days when I started my very first job out of college, I needed a bank for direct deposit and where I could start saving some money.

The first bank I signed up for to deposit my hard-earned money was paying about 0.01% interest in savings. Note that this is standard (even to this day!) for many brick and mortar banks. 

I didn’t have a choice back in those days and had to go with it.

Here’s a simplified example of what it meant to get 0.01% interest on savings:

Let’s say I saved about $150 per month during one year for a total of $1,800.

By the end of the year, the bank paid me about $0.98 in interest in return for “holding” my money. Yup. You read that right. 98 cents. 

That means I’d end up with $1,800.98 in my bank account by the end of the year. Remember, the bank is making billions in the back end – for themselves.

Thankfully, I eventually learned to invest so that my money could work a lot harder (and more efficiently) for me.

Also, thankfully, online banks started emerging, offering interest rates significantly higher than the typical brick and mortar bank.

This meant I could now transfer my emergency fund (or any money I did not plan to invest) to an institution that respected me enough to pay me more than pennies.

SAVING MONEYPhoto credit: @yaryincharge

Make sure you aren’t leaving money on the table by keeping your savings in a bank that uses your money to make millions but isn’t returning the favor.

I understand banks have a lot of expenses, and their duty is to keep our money safe. However, paying pennies to their customers is just plain disrespect.

And if you’re wondering – The reason why Online Banks can pay interest rates that are higher than the norm is that they don’t have overhead expenses. All the work is done electronically, and they can afford to return the bulk of the money they are saving back to the customer. 

When it comes to your emergency fund and your savings, I encourage you to have that money growing for you at an online bank.

Here are a couple of my personal favorites:

#1 CIT Bank (*not associated with Citibank).

CIT Bank Money Market Account pays 0.45% APY

Savings Connect account pays 0.50% APY *New service


#2 Marcus by Goldman Sachs:

High yield savings account currently pays 0.50% APY

*Rates above are effective 10/14/21.

Interest rates offered by banks have decreased significantly across the board as a result of actions from the federal reserve.

However, online banks still offer rates significantly higher than the mediocre 0.01%.

Remember this: Whichever bank you decide to go with, just make sure it is a regulated, reputable, highly-rated institution such as the ones I outlined above.

If you aren’t ready to invest just yet and are in the process of building your emergency fund, I HIGHLY encourage you to save your money in a way that allows it to work hard for you. 

Tell me – how do YOU feel about online banking? Do you currently have an emergency fund?

Cheers to Health & Wealth!



Upcoming Courses & Resources:

Understanding Your Investing Options: Starter Guide for Beginner Investors: New to investing and not sure where or how to begin?! This guide is for you! Check out details here.

Ready, Set Invest: A Crash Course on Being Ready to Invest – This is a best-seller (2-hour class) all about how to be PREPARED to invest. Click here to enroll. 


7 thoughts on “Is Your Bank Returning The Favor?

    1. I see your point but don’t see it as a “new” problem at all. To be honest, anything that can possibly happen to an online bank, can happen to a regular brick and mortar bank! Any kind of business can be in danger of security issues. What can give us peace of mind with banks is that most (if not all) are FDIC insured. And so, our money is protected up to $250,000 per financial institution:

    1. I agree! Very strange how most banks get away with that. I think they use certain tactics to attract customers such as “convenience” (having branches everywhere) or other methods so that most people don’t realize what these banks are “really” doing behind the scenes. Hence, why I am a fan of online banking!

  1. I am 24 years old, have been working for a year and a half since graduating from college and it’s sad to say I have not saved any money. Throughout the time, I have saved but always turn to touching it and never replenishing the account. Now that I am learning about investing, I want to start saving so that I can put my money to work in the stock market but I know that first I need to have an emergency savings account. As a shopaholic, saving is such a huge challenge but seeing your insta post this morning and now reading this post. I know that the time is now!

    1. Hi, Laura! I love this so much. Thank you for sharing this and for your honesty. The truth of the matter is we all struggle with creating good habit! I think the key here is to just start. As I mentioned in the Instagram post, set up automatic deductions into a savings account of $5-$20 every 2 weeks (or whatever you can afford). You can just leave your money accumulate automatically and you’ll be saving. Once you feel more comfortable, you can increase the dollar amount. The money will start adding up quicker than you think. Try it!! Let me know how it goes.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: