I haven’t had a car payment in a decade.
No lease, no financing, no $749 a month disappearing into a lender’s account. Just my old 2007 Honda Element, still rumbling down the road. She’s not the prettiest girl at the bar anymore, but she’s all I need.
At some point, I realized every “small” car payment my friends were making could have been a serious savings engine.
The power of redirecting that $749 a month
The average new car payment today is a jaw-dropping $749 a month. Skip that for 10 years, and you’ve kept nearly $90,000 in your pocket before even earning a cent in interest.
But that money doesn’t have to sit idle. Over the past few years, the first place I’ve been putting what would’ve been my “car payment” is straight into a high-yield savings account. At around 4.50% APY, that’s earned me thousands in interest while staying completely risk-free.
While I don’t want to keep all of my money in an HYSA, I keep my emergency fund with a few months of living expenses there and just make sure it’s always topped off. Beyond that, everything flows into my favorite tax-advantaged retirement accounts.
Why I park my money in a high-yield savings account
I treat my HYSA like a first stop for the money I used to waste on car payments. It’s my emergency and peace-of-mind fund, and here’s what makes high-yield savings accounts so easy to love:
- Safe and FDIC-insured up to $250,000
- Instant access when you need your cash
- Rates still around 4.00%, even as the Fed starts cutting
What you could do instead of sending money to a bank
Once I saw how quickly my savings grew, I realized it was really about peace of mind. I never worry about an unexpected bill or repair anymore. My high-yield savings account is my safety net, and every month I go without a car payment, that net gets stronger.
If you want that same feeling, start by opening a high-yield savings account that actually rewards you for saving. Rates around 4.00% APY won’t last forever, but getting started now could give you years of financial breathing room.