Vanguard Survey Reveals Savings Blind Spot: Idle Cash

The survey discovered that Americans' savings are losing value

VALLEY FORGE, Pa., March 19, 2025 /PRNewswire/ -- Vanguard's new national consumer survey revealed a startling savings blind spot: idle cash. While nearly 90% of Americans currently save or plan to save for short-term goals, 60% do not completely understand how interest rates impact their savings. This translates into most Americans putting their cash savings into vehicles that are slow growing—often trailing inflation. In fact, 57% of survey respondents report that their savings are earning less than 3% interest, including 24% earning less than 1%. 

"Americans are not earning the returns they deserve on their hard-earned cash. While the overwhelming majority are saving, most aren't saving in vehicles where their cash is getting a fair return," said Matt Benchener, Managing Director of Vanguard's Personal Investor business. "Vanguard is on a mission to change that with our Cash Plus account, potentially allowing Americans to earn eight times more than with a traditional bank savings account. With inflation and fluctuating interest rates impacting purchasing power, it's more important than ever to ensure that consumers understand how to safeguard their savings. It's time to start thinking beyond your bank."

The times are a-changin'
While Americans are building their short-term savings for different purposes, like vacations (38%), new cars (31%), and unexpected home repairs (24%), many share one thing in common: their savings accounts aren't pulling their weight. More than half of respondents (54%) save in traditional bank savings accounts or checking accounts (39%), where average interest rates are roughly 0.41% compared to rates such as 3.65% in other savings vehicles, like Vanguard's Cash Plus account¹. This might contribute to the fact that 72% of Americans are not completely confident they will reach their savings goals over the next two years.

Although Americans are not capitalizing on the interest their savings could earn, they recognize the need to change their savings behaviors. Sixty six percent of respondents plan to adjust their current savings strategy in the next year, citing inflation (44%) as the biggest driver of this decision. But nearly one-third of Americans don't know how to start making those changes.

"By leveraging accounts with competitive yields and establishing intentional savings strategies, Americans can make their money work harder," said Andrew Kadjeski, Principal and Head of Brokerage & Investments for Vanguard's Personal Investor business. "We designed the Cash Plus account to give Americans a simple, effective way to save with intention and view their savings alongside their long-term investments."

How to make your savings work harder
Cash Plus is currently yielding 3.65% APY¹, compared to the average bank savings account yield of 0.41%. In addition to a better yield, Cash Plus offers FDIC coverage², easy access to account and routing numbers for bill pay and direct deposit, connectivity to payment apps like PayPal and Venmo, and no minimum balance requirements. Along with Cash Plus, Vanguard also offers a full suite of liquidity solutions including money market and ultra-short-term bond funds. For more information on Cash Plus, visit vanguard.com/cashplus.

Survey methodology
The consumer survey was fielded by Big Village among a representative sample of 1,011 U.S. adults 18 years of age and older. This survey was live on January 14, 2025. Quota sampling is used to collect a nationwide sample of respondents who are weighted by gender, age, region, race/ethnicity, and education to mirror the demographical composition of the U.S. population using Current Population Survey proportions.

About Vanguard
Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to tens of millions of individual investors around the globe—directly, through workplace plans, and through financial intermediaries. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com

¹The Cash Plus sweep program APY (annual percentage yield) is 3.65% effective January 6, 2025. The APY will vary and may change at any time. APY is current as of date of publication. Current APY is available at vanguard.com. Source for average bank savings yield of .41%: FDIC National Rate Caps as of January 21, 2025. There may be other material differences between these products that must be considered prior to investing.

²Bank sweep program balances are held at one or more Program Banks, earn a variable rate of interest, and are not securities covered by SIPC. They are not cash balances held by Vanguard Brokerage Services (VBS), a division of Vanguard Marketing Corporation (VMC); VMC is not a bank. Balances are eligible for FDIC insurance subject to applicable limits. See the list of participating Program Banks.  

The Vanguard Cash Plus account is a brokerage account offered by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC. Under the Sweep Program, Eligible Balances swept to Program Banks are not securities: They are not covered by SIPC but are eligible for FDIC insurance, subject to applicable limits. Money market funds held in the account are not guaranteed or insured by the FDIC but are securities eligible for SIPC coverage. See the Vanguard Bank Sweep Products Terms of Use and Program Bank list on vanguard.com for more information.  

For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

All investing is subject to risk, including possible loss of principal.

Bank savings accounts may have characteristics that differentiate them from bank sweep programs offered by Vanguard Cash Plus. For example, they may offer overdraft protection, ATM access (immediate access to your money), and other convenience features. Each company's products differ, so it's important to ask questions to understand account features.

Some third-party institutions may not accept the Cash Plus Account routing number for transactions. If you have any issues using the routing number on a third-party website, contact the provider.

Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

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SOURCE Vanguard