Where to find the highest rates depends on the account type and your bank choice

The bank with the highest interest rate changes weekly, and it depends on what you're saving in. A bank offering 5.35% on a savings account might offer only 4.80% on a money market account. Online banks like Marcus, Ally, and American Express Personal Savings typically post higher rates than brick-and-mortar banks because they have lower overhead costs. Traditional banks like Chase, Bank of America, and Wells Fargo usually offer rates between 0.01% and 0.05% on savings accounts—far below what online banks pay.

The rate you see advertised is the Annual Percentage Yield (APY), which includes compounding. A bank might advertise "5.35% APY" on a high-yield savings account, meaning if you deposit $10,000 and make no withdrawals, you'll earn roughly $535 in interest over one year (before taxes). That same $10,000 at Chase's standard savings rate of 0.01% APY would earn about $1 over the year.

Interest rates move constantly. The Federal Reserve sets a target range for the federal funds rate, and banks adjust their savings rates in response. When the Fed raises rates, new accounts opened weeks later may earn more than accounts opened today. When the Fed cuts rates, banks lower their APY within days or weeks.

Key Takeaways

  • Online banks typically offer 4.5% to 5.5% APY on savings accounts, while traditional brick-and-mortar banks offer 0.01% to 0.05%.
  • The highest rate available today will not be the highest rate available next month, because banks change rates weekly or more often.
  • High-yield savings accounts, money market accounts, and certificates of deposit (CDs) each have different rate ranges and different rules about withdrawals.
  • The rate you see advertised is APY, which already includes the effect of compounding, so you can compare rates directly across banks.
  • Your own bank's rate may be lower than the advertised rate if you opened your account years ago and the bank has not raised your rate.

How to compare rates across account types

Savings accounts, money market accounts, and CDs all earn interest, but at different rates. High-yield savings accounts at online banks currently range from 4.5% to 5.35% APY. Money market accounts at the same banks range from 4.6% to 5.30% APY—slightly lower because they come with check-writing privileges. CDs lock your money away for a set term (three months to five years) and pay higher rates in exchange: currently 4.5% to 5.50% APY depending on the term.

The difference between a 5.35% rate and a 4.50% rate matters only if you have money to deposit. On $10,000, the difference is $85 per year. On $100,000, it's $850 per year. On $1,000, it's $8.50 per year. If you have less than $5,000 to save, the difference between a 5.35% account and a 5.25% account is negligible—focus instead on whether the bank has monthly fees or minimum balance requirements that would eat into your earnings.

CDs pay more than savings accounts because your money is locked in. If you need the money before the CD matures, you pay an early withdrawal penalty—typically three to six months of interest. A CD paying 5.50% APY for one year sounds better than a savings account paying 5.35%, but if you withdraw early, you lose money. Only use a CD if you are certain you won't need the funds before maturity.

Banks currently offering competitive rates

As of the most recent rate environment, these banks have posted some of the highest rates available, though rates change frequently and vary by account type:

  • Marcus by Goldman Sachs: Known for high-yield savings rates, typically in the 4.8% to 5.35% range, with no monthly fees or minimum balance.
  • Ally Bank: Offers high-yield savings and money market accounts in the 4.6% to 5.35% range, plus CDs up to 5.50% for certain terms.
  • American Express Personal Savings: High-yield savings accounts typically at 4.9% to 5.35% APY with no fees.
  • Discover Bank: High-yield savings and money market accounts in the 4.5% to 5.35% range, plus CDs competitive with other online banks.
  • Capital One 360: Money market and savings accounts typically at 4.4% to 5.35% APY.
  • Synchrony Bank: High-yield savings accounts often at 5.0% to 5.35% APY.

These rates are current as of the time this article was written, but they will have changed by the time you read it. Do not choose a bank based on this list alone. Visit each bank's website directly to see today's rate, check for monthly fees, and confirm the minimum deposit required.

Why your current bank's rate is probably lower

If you have a savings account at Chase, Bank of America, Wells Fargo, or another large traditional bank, your rate is likely 0.01% to 0.05% APY. This is not because those banks are hiding a better rate—it's because they make money from loans and investments, not from paying you interest on deposits. They can afford to pay almost nothing because most customers never move their money.

Banks do not automatically raise your rate when they raise rates for new customers. If you opened a savings account at Chase five years ago at 0.01% APY, your rate is still 0.01% today, even though Chase now advertises 0.05% for new accounts. You have to move your money to a new bank or a new account to earn the higher rate. Some banks offer a way to switch to a higher-rate account without closing the old one, but you have to ask.

The difference between 0.01% and 5.35% on $50,000 is roughly $2,670 per year. That is real money. If you have been keeping savings in a traditional bank for years, moving to an online bank with a high-yield account will increase your earnings significantly.

What happens to rates when the Federal Reserve makes changes

The Federal Reserve does not set the interest rate banks pay you. It sets the federal funds rate, which is the rate banks charge each other for overnight loans. When the Fed raises this rate, banks have an incentive to raise the rates they pay on savings accounts to attract deposits. When the Fed cuts rates, banks lower savings rates to reduce costs.

The lag between a Fed decision and a change in your bank's rate is usually one to three weeks. Some banks move faster than others. Online banks that compete heavily on rate often move within days. Large traditional banks may wait weeks or move only partially, because they rely less on deposits and more on other sources of funding.

If the Fed is expected to cut rates soon, locking in a CD at today's rate makes sense. If the Fed is expected to raise rates, keeping money in a flexible high-yield savings account is better than locking it into a low-rate CD, because your savings account rate will rise automatically.

Fees and minimums that reduce your effective rate

A bank advertising 5.35% APY but charging a $10 monthly fee is not actually paying you 5.35%. On a $5,000 balance, that $10 fee costs you $120 per year, which is 2.4% of your earnings. Most online banks charge no monthly fees and have no minimum balance, which is why they are worth using even if their rate is 0.1% lower than a competitor's.

Check the fine print for these common fees: monthly maintenance fees, fees for falling below a minimum balance, fees for exceeding a certain number of withdrawals per month, and fees for closing an account early. A few banks charge fees only if you do not meet certain conditions (like setting up direct deposit), so read the full terms before opening an account.

Some banks offer rate bonuses for new customers—an extra 0.25% or 0.50% APY for the first three or six months. These bonuses are real money, but they expire. Factor the bonus into your decision only if you plan to keep the account open after the bonus period ends.

How to lock in a rate before it drops

If you believe interest rates will fall, a CD is your tool. A CD locks in a rate for a set period—three months, six months, one year, two years, five years. If you buy a one-year CD at 5.35% APY and rates drop to 4.00% in six months, your CD still pays 5.35% for the full year. You cannot access the money without paying an early withdrawal penalty, but your rate is may provide.

The tradeoff is flexibility. If you need the money before the CD matures and rates have fallen, you lose money on the early withdrawal penalty. If rates rise and you are locked into a low-rate CD, you cannot move the money to a higher-rate account without paying a penalty. CDs make sense only if you have money you will not need for a specific period and you want to protect against rate cuts.

For money you might need sooner, a high-yield savings account is better. Your rate will drop if the Fed cuts rates, but you can withdraw your money anytime without penalty. You trade the certainty of a locked-in rate for the flexibility to move your money if a better opportunity appears.

Frequently Asked Questions

Do I have to move my money to a new bank to get a higher rate?

Yes, in most cases. Your current bank will not raise your rate on an existing account unless you ask and they agree. Some banks let you open a new account at the higher rate without closing the old one. Call your bank and ask if you can switch to a higher-rate savings product, or move your money to an online bank offering a better rate.

What's the difference between APY and interest rate?

APY includes the effect of compounding—interest earned on interest. A bank might quote an interest rate of 5.30% compounded daily, which becomes 5.35% APY. When comparing banks, always use APY, because it shows what you actually earn. APY is the number you see advertised.

Is my money safe in an online bank?

Online banks are insured by the Federal Deposit Insurance Corporation (FDIC) the same way traditional banks are. Your deposits up to $250,000 per account are protected if the bank fails. Check that the bank displays the FDIC logo on its website before opening an account.

Should I put all my money in a CD to lock in today's rate?

Only if you will not need the money before the CD matures. Early withdrawal penalties typically cost three to six months of interest. If you might need the money, keep it in a high-yield savings account where you can withdraw anytime without penalty. You can always move money to a CD later if rates start falling.

How often do banks change their interest rates?

Online banks change rates weekly or more often, sometimes multiple times per week. Traditional banks change rates less frequently, sometimes only when the Federal Reserve makes a major decision. Check your bank's website or call to confirm the current rate before opening an account, because the rate you saw yesterday may have changed.