You know it’s coming.

The low punch in the gut every time you look at what your savings account balance actually earned throughout the month or year.

You deserve to feel the lift that comes with watching your balance grow. Answer these two questions to find out if you need to “save” your savings from next-to-nothing earnings.

 What are you earning?

Chances are it’s not much. The average interest rate on savings accounts in the U.S. has hovered well below 1% for the past several years.

Log in to your savings account to see what your current annual percentage yield (APY) is. The rate should be listed on your monthly statement. If it’s less than 1%, now is the time to get a better rate. Here’s why.

Your APY refers to how much money you earn on a deposit over a year, assuming the deposit remains in your account for the entire year. APY also takes into account compounding interest. Simply put, compounding interest allows you to earn interest on your principal plus interest on your earnings.

At Ally Bank, we compound interest daily rather than monthly or yearly so you get the maxiumum benefit from that compounding effect.

So, how does this all add up? The example below illustrates the impact of three different APYs on a $25,000 deposit for one year.

Savings account APY examples* Estimated earnings for a one-year deposit of $25,000^
0.01% $2.50
0.03 % $7.50
1.45 % $ 362.50

*APY examples are for informational purposes only. ^Estimated earnings do not account for any changes to your balance, including deposits or withdrawals, over a 12-month period.

As you can see, rates matter. Don’t be tempted to dismiss those percentage points (or even half-a-percentage-point) as insignificant. In reality, those little numbers can make a big difference to your overall balance.

If you’re a show-me-the-money type of person, run your own numbers and see for yourself how different rates affect your potential earnings. You can go old school with pencil and paper math or use our savings interest calculator to figure out your potential earnings with a higher rate.

 Are you set up for growth?

Getting your money into a savings account with a respectable APY is a step in the right direction. But the quickest way to see your balance grow is to commit to making regular deposits in an amount that works best for you.

The tried-and-true trick is to “pay yourself first.” This simply means that every time you get paid, make sure you “pay yourself first” by moving a chunk of money into your savings account.

You can even set up an automatic transfer for those paydays that come on a regular basis. Not only will this help you stay on track with your savings goals, it can also help you take advantage of what experts call the time value of money and the power of compound interest.

Bottom line: keep an eye on your APY. Remember, the more you save, the faster your savings grows. Once your balance starts looking respectable, you may want to explore other ways to save. But first, you have to open the right account and commit to a regular deposit schedule.

At Ally Bank, we believe the right savings account is more than just an online piggy bank. It goes beyond great rates and immediate access. Here is a list of things you can expect as an Ally Bank Online Savings Account customer.

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