If you keep money in a savings account earning close to zero, it is worth a look. For instance, $5,000 at 0.5% earns about $25 in a year, while the same amount at 4% earns about $200. Check current rates, but the gap is why the apps you already use are worth a second look.
Before becoming overwhelmed by the range of available opportunities, why not consider the following proven principles that could help you save money safely through the digital banking apps you already use?
Set up a savings account that suits your needs.
First off, you need to be clear on your savings goals. How much money do you want to save per year or per month? Then, set up a savings account with that goal in mind. This will help you find the best way to save money that suits your lifestyle.
Do you find it easier to round up your shopping expenses and save the change? Or do you prefer setting up a recurring transaction to your savings account on the day you get paid?
Remember that savings earn interest. So, you’re basically making your money work for you rather than filling the piggy bank and never using that change again.
Banking apps usually provide various savings options, including savings buckets. Like the automatic roundups, you can set up savings buckets before major events like a vacation or a wedding. Depending on your bank, you can have either a separate vault within your savings account or a separate savings account with its own number for increased flexibility and better control.
If you have some savings and you know you don’t need or want to touch them for a year or two, they can earn you serious interest through a certificate of deposit. They usually have higher interest rates than regular savings accounts. However, they might have early withdrawal penalties.
You can also use digital banking apps to split bills and expenses with your friends and family. This helps you avoid carrying the burden of paying significant amounts at once and waiting or hoping they will pay you back.
Of course, you always have the option of high-yield savings accounts that pay much more interest, compared to a standard savings account. The FDIC’s national average for savings accounts is about 0.38%, while top online high-yield accounts currently pay around 4% APY.
Rates change, so check the current APY before you open one. You do have to meet minimum balance requirements and monthly withdrawal limits, and the rates fluctuate with inflation and central bank policies.
Leverage AI agents to find mortgage rates.
Banks are racing to implement generative AI, not just to direct you to the right consultant but also to handle customer service inquiries, such as finding the best mortgage rate the bank can give you. A word of caution: use your bank’s AI assistant but compare the lenders yourself.
The agentic (autonomous) AI tools that banks have started to implement act as financial assistants. They provide individualized advice on how to optimize spending, savings, and investments to help you reach your goals. The risks can be high with this type of tool, however. You need to understand that your experience will inform regulation, policies and best practices, which tend to be lacking now, as banks race to get the technology faster.
Agentic AI can be your fraud prevention companion, in addition to loan automation and investment optimization. It is also capable of hyper-personalization. This means that it can process huge amounts of data and tailor responses to a particular customer, not a customer demographic.
Agentic AI can proactively analyze your spending patterns, engagement with banking tools, and life events based on your account usage. It uses it to paint a picture of your needs as a customer before you even state the issue you need help with.
Dive deep into the features of your digital helpers.
Use personal finance tools in your digital banking apps to set up budget alerts, highlight better credit rates, and use in-app options to tackle debt.
You can also use the dashboard your app offers, as it can be quite revealing about your monthly spending, often by category. If your dashboard is not particularly helpful, it might mean you need to provide additional information. For instance, you might need to tell your app which category a particular merchant fits in, such as utilities, takeout, or entertainment. This way, you can get a more accurate picture of your spending patterns.
Dashboards can also provide insights across currencies, which can be useful when you travel. Plus, they highlight seasonal patterns and can flag if you tend to break the bank while on vacation.
Many digital banks can also provide tools to help you check your credit score, in addition to giving you advice on how to improve your score. So, you get better loan rates, not to mention faster approval, compared to traditional banking.
Consider financial instruments from non-bank companies.
Big Tech firms and consumer brands move toward the embedded finance market by integrating financial services, like banking, lending, and insurance, into non-banking apps. You can take advantage of this integration and explore these opportunities to grab money-saving deals, buy in bulk, or pay after 30 days, although the latter may carry fees.
Digital wallet apps are not just another app that takes space on your phone and records your card details. They can be a great way for you to not only manage your spending and save more but also to streamline your finances. You need to find the digital wallet that works best for you. Most of them will let you set a savings goal, set budgets for various spending categories, implement roundups, set reminders when you are close to hitting a budget, or when bills are due, and offer rewards and discounts.
For instance, you can grab a vacation package or a huge discount on a medical service as a partner deal in your shopping app. The key point is whether that spend is within your budget or rather an impulsive purchase.
Before transferring your money, check if it’s insured.
High interest rates or great app features are useless if there is no protection of money. FDIC insurance protects customers against losses up to $250,000 per customer per FDIC-insured bank with an FDIC-insured account (checking, savings, etc.).
However, this is not the case with investments (crypto, stocks, bonds, etc.). Some apps are not banks. They partner with one, and your money is only protected once it reaches that insured bank. Even then, the insurance covers the bank failing, not the app company.
Credit unions are insured by the NCUA like banks, although some state-chartered credit unions may have private insurance supported by companies with no federal backing.
How to check in five minutes:
- Identify the partner bank by going through the app’s terms.
- Confirm that the bank has FDIC insurance by using their BankFind tool.
- Understand how deposits are handled, as they are only covered if/when deposited in the bank, so check how quickly your app deposits them.
- Check the limit, since the max of $250,000 is shared among apps using the same partner bank. Use the EDIE calculator to get an estimate.
- For credit unions, make sure to check for insurance by visiting NCUA’s Credit Union Locator.
If the information is difficult to come across, the app may be at risk. Double-check the info from FDIC’s guide on digital banking and NCUA’s insurance page.
Save money without a savings account.
You could also consider different options to a savings account altogether, which can bring you serious savings. Money market accounts, peer-to-peer lending or credit union accounts can get you higher yields compared to regular savings accounts. Although money market accounts no longer have the six-withdrawal limit since 2020 by federal law, many banks still use this limit.
Peer-to-peer banking services are online borrowing and lending money between people or businesses, without the intermediation of banks. You can still use your digital banking apps to do this, but be aware that this method carries risk, as any lending or borrowing does.
Credit unions are financial institutions owned by their members with the mission to help people. This means they offer flexible rates, specialized loans, and tend to be more inclusive. However, you need to become a member to get all those perks.
To sum everything up, you don’t need to use every tool on this list: start with one this week, such as an automatic transfer to a high-yield savings account and confirm it is FDIC- or NCUA-insured before you deposit. Small, automatic habits add up over time, and a two-minute insurance check keeps them safe.
Valeria Popa is a personal finance and fintech writer for UK and US audiences. She has experience writing articles, blog posts, and case studies. Valeria has built her expertise with an MSc with a distinction in Economics and Finance from the University of Leeds and an MSc with merit in Media and Communications from the LSE. Check out her portfolio here.
