Some Americans may not be saving as much as they could, if they’re saving at all, a recent Credit Karma survey found.
Even though a majority of Americans from our survey have a savings account, only a quarter said they have money saved in a high-yield savings account, according to our survey. And 73% of respondents with a savings account say they use a traditional savings account as their primary savings account — where their money could be earning minimal interest.
Why does this matter? Because America has a savings problem. According to our survey data, 42% of respondents who feel they should be saving more say they can’t because they live paycheck-to-paycheck, with every dollar allotted for. And nearly a quarter of respondents with a savings goal think they’re somewhat or very unlikely to meet it.
It’s all the more important to take whatever money you can save and make it work as hard as it can for you. High-yield savings accounts, which can offer annual percentage yields, or APYs, that are more competitive than traditional savings accounts, some with 2.0% APYs or higher, can help accelerate your savings.
The number one thing keeping Americans from opening a high-yield savings account: lack of information, survey responses suggest.
Data from our survey revealed that 41% of respondents don’t know what a high-yield savings account is, while more than half (52%) aren’t sure where to start to set one up. And many Americans are choosing to stick with their traditional savings accounts simply because it’s easier than moving their money to an account that earns more interest. (Learn about our methodology.)
But healthier stats around savings could be on the horizon, with millennials leading the charge. Millennial respondents from our survey were more likely to have a high-yield savings account than other generations — 35% of millennials said they had one compared to 23% for Gen Z and 21% for Gen X and older. And more than half of millennial respondents (53%) were more likely to say technology has made it somewhat or much easier to save compared to Gen X and older (45%) or Gen Z (39%).
Paying attention to your savings, taking advantage of technology and considering a high-yield savings account are just a few key steps to smarter savings. We’ve got some other tips to help you save, but first let’s look at what could be holding American savings back.
Key survey findings
|76% of respondents said they have money in a savings account, but only 25% have money in a high-yield savings account.|
|41% of respondents said they don’t know what a high-yield savings account is, while 52% said they don’t know where they’d start to set one up.|
|Among respondents who do have a savings account (high-yield or traditional), only 22% treat their high-yield savings account as their primary savings account.|
|Millennial respondents signaled that they’re making moves to save more efficiently. Among millennial respondents with a high-yield savings account, a full 81% have moved their savings from a traditional savings account to a high-yield savings account in the past year.|
|Nearly twice as many millennial respondents said they treat their high-yield savings account as their primary savings account (30%), compared to Gen Z (16%), and Gen X and older (18%).|
|A majority of respondents (72%) think they could or should be saving more, but said there are several key factors preventing them from doing so, including living paycheck-to-paycheck (42%), living in areas where costs are too high (36%), and experiencing recurring surprise and/or emergency expenses that use up money that would otherwise go into savings (34%).|
What’s keeping Americans from saving?
There are a few roadblocks that could be keeping Americans from saving as much as they could.
1. For many, saving feels out of reach
According to our survey, more than half of respondents (51%) have a savings goal, including things like saving for an unforeseen emergency, retirement and vacation. But nearly a quarter of respondents (23%) said they think they’re somewhat or very unlikely to meet their savings goal.
Close to half (49%) of respondents without a savings account said they believe savings accounts are for people with more money than them. And while 72% of respondents from our survey feel they should (or could) be saving more, 42% say they’re living paycheck-to-paycheck, which holds them back from saving. Here are other factors respondents said are holding them back from saving.
- Living in areas where costs, including rent, are too high (36%)
- Experiencing recurring surprise and/or emergency expenses that use up money that would otherwise go into savings (34%)
- Having dependents (19%)
- Paying off student loan debt and/or seeking out higher education (19%)
2. Lack of information around savings account options
But lack of extra funds isn’t the only reason respondents said they aren’t saving. Our survey found that 41% of Americans don’t know what a high-yield savings account is, and more than half (52%) wouldn’t know where to start to set one up. Of those with savings accounts, 73% said their primary savings account is still a traditional savings account.
3. It’s easier to keep money where it is
When it comes to savings, drive is a factor, our survey found. Of the more than 70% of Americans from our survey without a high-yield savings account, 36% said they’re either happy with their traditional savings account or feel it’s easier to just keep their money where it’s been, while 7% pointed to a lack of desire to do the research on high-yield savings.
But younger generations are more willing to make the switch. When asked how likely they would be to move their savings from a traditional deposit savings account to a high-yield savings account, 58% of millennial respondents said they would be somewhat or very likely to do so, compared to just 38% of Gen X and older.
Millennials are more likely to use high-yield savings accounts
Despite the overall sentiment among respondents that they’re not saving as much as they could, millennial respondents seemed to be in better shape than other generations when it comes to prioritizing savings and putting their money into high-yield savings accounts. For example, two-thirds of millennials (66%) from our survey said they have a specific savings goal, compared to just 41% of Gen X and older.
Here were the top savings priorities for millennial respondents, according to our findings.
|Goal||Percent of millennials saving toward this goal|
Among millennial respondents with a high-yield savings account, a large majority (81%) have moved their savings from a traditional savings account to a high-yield savings account within the past year.
Overall, more than one-third (35%) of millennial respondents had a high-yield savings account, compared to just 21% of Gen X and older, according to our survey. And 30% of millennial respondents said they consider their high-yield savings account to be their primary savings account.
Many millennial respondents (71%) were also taking advantage of technology to manage their money — using online tools and apps to simplify their finances through automation, our survey found.
Tips to help you build savings
It might seem like a difficult task to start and grow your savings. Whether you’re just starting to build savings or looking to grow your savings more quickly, these three tips below can help you get strategic around your savings.
1. Know your savings options
If you’re among the 52% of Americans surveyed who aren’t sure where to start when it comes to high-yield savings accounts, it can help to understand what a high-yield savings account is.
Learning about the magic of compound interest is also key to understanding why a high-yield savings account could help you grow your savings faster than a traditional savings account.
2. Set a savings goal
Once you’re familiar with the types of savings account options out there, it’s time to set a savings goal — which 49% of respondents don’t have, according to our survey. But having a goal around how to build your savings can make getting there much more achievable.
If you struggle with feeling too burned out to think about your finances, break your goals down into smaller, more-immediate goals so that they’re less overwhelming. Consider creating a budget, and make sure you’re paying off your debts in addition to planning for savings.
One option to consider is the 50-30-20 rule, a budgeting rule that suggests you spend 50% of your income on necessities (think rent and other bills) and 30% on fun, and save or pay down debt with the remaining 20%.
3. Take action to save
Remember compound interest? It means that taking even small steps toward saving could produce big results. If you put aside what you can each week — even if it’s just $1, $5 or $20 — it can mean a significant amount of savings over a year or two.
Credit Karma has an online compound interest calculator that can help you see just how powerful compound interest can be over time.
If you feel like you can’t set aside a chunk of money for long-term goals like a home or retirement, you might want to prioritize having an emergency fund in order to save for unexpected expenses that could derail your savings goals.
On behalf of Credit Karma, Qualtrics commissioned a nationally representative online survey of 1,050 Americans ages 18 and over in August 2019 to better understand the savings goals and habits of Americans.