3.6% APY is competitive but not the highest available
Whether 3.6% APY is good depends on what else is available at your bank and what you're comparing it to. As of early 2024, online banks and credit unions regularly offer rates between 4.5% and 5.35% APY on savings accounts, while traditional brick-and-mortar banks often pay 0.01% to 0.5%. A 3.6% rate sits in the middle—better than most physical bank branches, but behind the leaders in the online market.
The rate also matters less than where you're keeping the money. If you have $10,000 in a savings account earning 0.01% at a major bank, moving it to 3.6% gains you $350 per year instead of $1. Moving that same $10,000 to a 5% account gains you $500 per year. The difference between 3.6% and 5% on $10,000 is $140 annually—real money, but only if you're comparing accounts that are otherwise identical.
Rates change constantly. Banks raise and lower APY based on what the Federal Reserve does with its benchmark rate. A 3.6% offer today might be outdated in three months, or it might remain competitive. Check what other banks are paying before you move money, and check again every few months if you're keeping a large balance somewhere.
Key Takeaways
- Online banks and credit unions currently offer rates between 4.5% and 5.35% APY, making 3.6% middle-of-the-road rather than exceptional.
- The difference between 3.6% and 5% APY on $10,000 is $140 per year, so comparing rates matters most when you have a substantial balance.
- Banks change their APY rates frequently in response to Federal Reserve decisions, so a competitive rate today may not be in six months.
- Switching accounts costs nothing and takes a few days, so moving money to a higher rate is worth doing if the difference is more than 0.5%.
How to find what other banks are currently paying
The fastest way to see current rates is to visit the websites of online banks directly. Ally Bank, Marcus by Goldman Sachs, American Express Personal Savings, and Wealthfront Cash Account all publish their rates on their home pages. Credit unions often pay higher rates than banks; search for "credit union savings rates" plus your state name, or visit CO-OP Network or Allpoint to find credit unions near you that accept out-of-state members.
When you compare, make sure you're looking at the same product. A money market account, a high-yield savings account, and a regular savings account may all have different rates at the same bank. Also check the minimum balance required to earn the advertised rate—some banks pay the full rate only if you keep $25,000 or more in the account.
Rate comparison sites like Bankrate, DepositAccounts.com, and NerdWallet update their listings regularly, but they are not always current within the same day. If a rate looks good, visit the bank's website directly to confirm before you move money.
When 3.6% is actually good enough
If you have less than $5,000 in savings, the difference between 3.6% and 5% is under $70 per year. At that balance, the effort of switching accounts may not be worth it, especially if you're happy with your current bank's customer service or app. The time you spend opening a new account, transferring money, and updating automatic deposits might cost you more in hassle than you gain in interest.
3.6% is also reasonable if your bank offers other features you value—a debit card with no foreign transaction fees, good customer service, or integration with other accounts you use. Banks are not interchangeable; if switching means losing something you rely on, staying put makes sense.
If you're using the savings account as an emergency fund that you might need to withdraw from quickly, the rate matters less than access and reliability. A 3.6% rate at a bank you trust beats a 5.2% rate at an institution you've never heard of, because you need to know your money is there when you need it.
The relationship between APY and Federal Reserve rate changes
Banks set their savings rates based partly on the Federal Reserve's benchmark rate, which is the interest rate the Fed charges banks to borrow from each other. When the Fed raises its rate, banks usually raise savings rates within weeks. When the Fed cuts its rate, banks cut savings rates more slowly—sometimes taking months to pass the cut along to customers.
This means a 3.6% rate you see today might drop to 3.2% in six months if the Fed cuts rates, or it might stay the same if the Fed holds steady. You cannot predict which will happen, but you can watch the Fed's announcements (published on federalreserve.gov) to get a sense of what might come next. If the Fed is expected to cut rates soon, locking in a current rate by moving your money makes more sense.
Conversely, if the Fed is expected to raise rates, waiting a few weeks before moving money might get you a higher rate. But this is a small edge; the difference between moving now and moving in three weeks is usually less than 0.1% APY.
How to move money without losing interest
When you switch banks, your interest stops accruing at the old bank on the day you withdraw the money, and it starts accruing at the new bank on the day the deposit clears. Most transfers take one to three business days, so you lose interest for that period. On $10,000, losing three days of interest at 3.6% costs you about $3.
To minimize the gap, initiate the transfer late in the day or on a Friday, so the money spends a weekend in transit. Some banks also offer a grace period where they backdate the interest start date by a day or two if you move money from another bank; ask before you transfer.
If you're moving a very large balance—$100,000 or more—consider splitting it across two or three banks. This spreads your risk (the FDIC insures up to $250,000 per depositor per bank) and lets you test whether you like each bank's app and service before committing all your money.
What happens if rates drop after you move your money
If you move $10,000 to a 3.6% account and the bank cuts the rate to 3.2% two weeks later, you keep earning 3.6% on that $10,000 unless you withdraw it. Your rate is locked in for as long as the money stays in the account. You only earn the new, lower rate on money you deposit after the rate change.
This is why moving money to a higher rate is low-risk. You cannot lose money by switching; you can only gain the difference between the old rate and the new one. If the new bank's rate drops, you can move the money again to a bank paying more.
Frequently Asked Questions
Is 3.6% APY better than keeping money in a checking account?
Yes. Most checking accounts pay 0% to 0.5% APY. Moving $10,000 from a checking account paying 0.1% to a savings account paying 3.6% gains you about $350 per year. Checking accounts are meant for spending money, not storing it, so use a savings account for money you're not touching.
Do I have to pay taxes on the interest I earn?
Yes. Interest earned on a savings account is taxable income. Your bank will send you a 1099-INT form in January if you earned $10 or more in interest during the year. You report this on your tax return. The higher your APY, the more interest you earn, and the more you owe in taxes—but you still come out ahead.
Can I move my money to a different bank if rates drop?
Yes. There is no penalty for moving money between savings accounts at different banks. You can switch as often as you want. Some banks limit how many times you can transfer money out per month (usually six), but moving money between banks does not count against that limit.
What if I need the money before the year is over?
You can withdraw it anytime without penalty. Savings accounts have no lock-in period. You earn interest only for the days the money sits in the account, so if you withdraw after three months, you earn three months of interest at the stated APY rate.
Should I move money to a 5% account if I only have $2,000?
The difference between 3.6% and 5% on $2,000 is $28 per year. If switching takes you 30 minutes and you value your time at $20 per hour, the effort costs you $10 and the gain is $28, so it makes sense. If you're busy or prefer to stay with your current bank, the $28 is not worth the hassle.