Current savings account rates vary by bank and account type, ranging from near zero at large national banks to 4% to 5.35% at online banks and credit unions

The rate you earn depends almost entirely on where you keep your money. A savings account at Chase or Bank of America typically pays 0.01% annual percentage yield (APY), meaning $10,000 earns about $1 per year. The same $10,000 at an online bank like Marcus, Ally, or Wealthfront currently earns $400 to $535 per year at their posted rates. Credit unions often fall between these two, with rates around 2% to 4% depending on the institution and your balance.

These rates move when the Federal Reserve changes its benchmark interest rate. The Fed does not set savings rates directly—banks choose their own—but when the Fed raises or lowers its target range, banks typically adjust what they pay depositors within weeks or months. Rates have shifted significantly over the past two years as the Fed raised rates to fight inflation, then began cutting them in late 2023.

The rate you see advertised is the APY, which already includes the effect of compounding (interest earned on interest). When comparing accounts, always look at APY, not just the interest rate, because they can differ slightly depending on how often interest is credited to your account.

Key Takeaways

  • Online banks and credit unions currently offer the highest savings rates, typically 4% to 5.35% APY, while traditional brick-and-mortar banks pay under 0.1%.
  • Your rate depends on the bank you choose, not on how much money you deposit, though some credit unions require membership or minimum balances to earn advertised rates.
  • Rates change when the Federal Reserve adjusts its benchmark rate, and banks usually follow within weeks, so the highest rate today may not be the highest next month.
  • Money market accounts and certificates of deposit (CDs) at the same bank often pay more than regular savings accounts, but money market accounts may have withdrawal limits.

Where to find the highest rates right now

Online banks consistently offer the best rates because they have lower overhead costs than branches and pass those savings to depositors. As of recent months, banks like Ally, Marcus, American Express Personal Savings, and Wealthfront have posted rates between 4.2% and 5.35% APY on standard savings accounts. These rates change frequently—sometimes weekly—so the exact number you see depends on when you check.

Credit unions often match or exceed online bank rates, but you must be a member to open an account. Some credit unions have open membership (anyone can join), while others require you to work for a specific employer, live in a certain area, or belong to an organization. The CO-OP Network and Alliant Credit Union are examples of credit unions with broad membership. Rates at credit unions vary widely—some pay 0.5%, others pay 4% or more—so you need to check your specific institution.

Large national banks (Chase, Bank of America, Wells Fargo, Citibank) pay rates under 0.1% on savings accounts. They offer convenience through branches and ATMs, but the trade-off is significantly lower interest. If you keep money at one of these banks, you are forgoing hundreds of dollars per year in interest compared to an online alternative.

How rates differ by account type at the same bank

Most banks offer multiple savings products, and the rate varies by product. A regular savings account might pay 4.5% APY, while a money market account at the same bank pays 4.75%, and a 12-month CD pays 5.1%. Banks structure rates this way to encourage you to lock money away longer (CDs) or accept withdrawal restrictions (money market accounts).

Money market accounts typically pay more than savings accounts but limit how many withdrawals you can make per month—often six or fewer. If you need to access your money frequently, the higher rate may not be worth the restriction. CDs lock your money for a set term (3 months, 6 months, 1 year, 5 years) and pay a fixed rate for that entire period. If you withdraw early, you pay a penalty that can wipe out months of interest.

High-yield savings accounts are simply savings accounts at online banks or credit unions that pay higher rates than traditional banks. There is no special account type—the name just reflects the rate. All of these accounts are insured by the FDIC (at banks) or NCUA (at credit unions) up to $250,000 per depositor per institution, so your money is protected even if the bank fails.

Why rates differ between banks

Banks set their own rates based on how much they need to attract deposits. Online banks need deposits to lend out and earn money on loans, but they have low costs, so they can afford to pay depositors more. Traditional banks have branch networks and staff, which costs money, so they pay less to depositors and rely more on loan income to stay profitable.

Competition also drives rates. When one online bank raises its rate to 5%, others follow within days to avoid losing customers. When the Fed cuts rates, banks lower what they pay depositors—sometimes immediately, sometimes after a delay. A bank that cuts rates too slowly loses deposits to competitors; one that cuts too slowly loses money on loans it made at higher rates.

Your credit score, account history, and balance do not affect the rate you earn on a savings account. Banks pay the same rate to everyone at that bank for the same account type. This is different from loan rates, where your credit score matters. A savings account rate is purely a function of the bank's strategy and the current interest rate environment.

How to track rate changes and switch banks

Rates change frequently, so the best rate today may not be the best rate in three months. Websites like Bankrate, DepositAccounts, and NerdWallet update savings rates daily and let you sort by rate, FDIC insurance, and minimum balance. You can set up alerts on these sites to notify you when a specific bank's rate changes or when a new bank enters the market with a competitive offer.

Switching banks is straightforward. Open a new account at the bank offering the better rate, then transfer your money from your old account. Most online banks can pull money directly from your old bank account using your routing number and account number—you do not have to withdraw cash and deposit it. The transfer usually takes one to three business days. You can keep your old account open or close it; there is no penalty for closing a savings account.

If you have a large balance, even a 1% difference in rate adds up. On $100,000, the difference between 0.1% and 4.5% is $4,400 per year. It is worth spending 15 minutes to open an account at a higher-paying bank and move your money. If you have a smaller balance, the dollar difference is smaller, but the effort is the same.

What happens to your rate if the Fed cuts rates

When the Federal Reserve lowers its benchmark rate, banks typically lower what they pay depositors within weeks. The exact timing varies—some banks cut immediately, others wait a month or more. Your rate is not locked in; it can change at any time unless you have a CD with a fixed rate for a specific term.

If you want to protect yourself from rate cuts, a CD is your only option. A 12-month CD at 5% will pay 5% for the full 12 months, even if the Fed cuts rates and all savings accounts drop to 2%. The trade-off is that your money is locked away—you cannot access it without paying a penalty. Some banks offer "no-penalty CDs" that let you withdraw early without a penalty, but these pay slightly lower rates than traditional CDs.

Savings accounts are designed to be flexible, so rates move with the market. If you keep money in a savings account and rates fall, your earnings fall too. If rates rise, your earnings rise. This flexibility is valuable if you might need the money, but it means your rate is never may provide.

Frequently Asked Questions

Do I need a minimum balance to earn the advertised rate?

Most online banks do not require a minimum balance to earn their advertised rate on savings accounts. Some credit unions do require a minimum (often $500 to $2,500) to earn the full rate, or they pay a lower rate if your balance falls below the minimum. Always check the account terms before opening an account, because the rate you see advertised may only apply if you meet the minimum balance requirement.

Is my money safe in an online bank?

Yes. Online banks are FDIC-insured just like traditional banks, meaning your deposits are protected up to $250,000 per account type per bank if the bank fails. The FDIC insurance is the same whether you bank online or at a branch. The main difference is convenience—you cannot walk into a branch, but you can access your account 24/7 online and by phone.

Can I move money between savings accounts without losing interest?

Yes. Transferring money between your own accounts at different banks does not affect the interest you earn. Interest accrues daily based on your balance, so if you transfer $10,000 from Bank A to Bank B on the 15th of the month, you earn interest at Bank A for the first 14 days and at Bank B starting on the 15th. There is no penalty or loss of interest for moving money.

What if a bank offers a promotional rate that is higher than its regular rate?

Promotional rates are real but temporary. A bank might offer 5.5% APY for the first three months, then drop to 4.5% after that. Read the fine print to see when the promotional rate ends and what the regular rate will be. Promotional rates are worth taking advantage of if you plan to keep money at that bank anyway, but do not open an account solely for a promotional rate that expires in a few months.

How often is interest credited to my account?

Interest is typically credited monthly, though some banks credit it daily or quarterly. The frequency does not matter much because APY already accounts for compounding—a 5% APY will earn the same amount whether interest is credited daily or monthly. Check your account terms if you want to know the exact schedule, but the APY is what matters for comparing accounts.