The banks offering the highest rates change month to month
No single bank always has the highest yield. Banks raise and lower their rates based on what the Federal Reserve does and how much competition they face for deposits. Right now, online banks and some credit unions tend to offer rates between 4% and 5.35% APY, while traditional brick-and-mortar banks usually offer under 0.5%. But those numbers shift, sometimes weekly.
The banks with the highest rates today include Marcus (by Goldman Sachs), Ally Bank, American Express Personal Savings, Wealthfront, and several credit unions. However, the rate you see advertised is only locked in when you open the account. After that, the bank can lower it without your permission, and many do when the Fed cuts rates.
The practical approach is to check the current rates at a rate-tracking site like DepositAccounts.com or Bankrate before you open an account, then move your money if a better rate appears elsewhere. Most high-yield savings accounts let you transfer funds out without penalty.
Key Takeaways
- Online banks and credit unions currently offer the highest rates, typically between 4% and 5.35% APY, while traditional banks offer under 0.5%.
- Rates change frequently and are not locked in after you open an account, so the bank can lower your rate at any time.
- You can compare current rates on DepositAccounts.com or Bankrate to see which banks are offering the best yield right now.
- Most high-yield savings accounts have no withdrawal limits or penalties, so you can move your money to a higher-rate bank without cost.
- Credit unions sometimes offer competitive rates but may require membership or have deposit limits, so check their terms before opening.
Online banks versus traditional banks: where the rate difference comes from
Online banks have lower overhead costs than branches do. They don't pay for building leases, tellers, or branch staff. That savings gets passed to depositors as higher interest rates. A traditional bank with 500 branches nationwide cannot offer the same rate as an online bank with no physical locations and the same amount of deposits.
Traditional banks also make money differently. They rely on checking accounts, credit cards, and loans to generate profit. A savings account is almost an afterthought. Online banks often have no checking account or credit card product, so the savings account is their main business—they need to attract deposits to lend out, and a high rate is how they do it.
Credit unions operate on a membership model and return profits to members rather than shareholders. Some credit unions offer rates competitive with online banks, but membership requirements vary. Some are open to anyone in a geographic area; others require you to work for a specific employer or belong to an organization.
What to look for beyond the rate
The APY is not the only thing that matters. Check whether the bank charges a monthly maintenance fee, a minimum balance requirement, or a fee to withdraw money. Most high-yield savings accounts have none of these, but some do. A 5% rate with a $10 monthly fee is worse than a 4.8% rate with no fees.
Confirm that the bank is FDIC-insured (for banks) or NCUA-insured (for credit unions). This means your deposits up to $250,000 are protected if the bank fails. Every legitimate high-yield savings account carries this protection, but it is worth verifying on the bank's website or by calling.
Check the bank's website or call to confirm the rate you see advertised is the rate you will actually receive. Some banks show different rates for different deposit amounts or account types. Some show a promotional rate that expires after a few months. Read the fine print or ask directly.
How to move money between banks without losing interest
When you find a bank with a better rate, you can transfer your money without penalty. Most banks let you initiate an ACH transfer (Automated Clearing House) from your old bank to your new one, or from your new bank to pull money from your old one. This takes three to five business days and costs nothing.
Do not close your old account until the transfer is complete and the money shows up in your new account. Once it arrives, you can close the old account. If you close it before the transfer finishes, the transfer may bounce back.
Your interest accrues daily but is usually paid monthly. If you move money mid-month, you will receive interest from your old bank for the days you held the money there, and interest from your new bank starting the next day. You do not lose interest by switching.
Rate locks and how banks change rates
High-yield savings accounts do not have a locked rate. The bank can lower your rate at any time, and they usually notify you by email or mail a few days before the change takes effect. You have no contractual right to keep the old rate.
Banks typically lower rates when the Federal Reserve cuts its benchmark rate, which happens during economic slowdowns. They raise rates when the Fed raises its benchmark, which happens during periods of high inflation. If you want to lock in a rate, you would need a certificate of deposit (CD), which does lock the rate for a set term—but CDs usually have a penalty if you withdraw early.
Because rates change, it makes sense to check rates every few months. If your bank's rate has dropped significantly below what competitors offer, moving your money takes 10 minutes and costs nothing.
Credit unions and membership requirements
Some of the best rates come from credit unions, but you have to be a member to open an account. Membership requirements vary widely. Some credit unions are open to anyone in a county or state. Others require you to work for a specific employer, belong to a union, attend a particular church, or live in a certain area.
If you meet a credit union's membership requirement, their high-yield savings rates can match or beat online banks. Check whether there is a membership fee (usually $5 to $25 one-time) and whether there is a minimum deposit to open the account. Some credit unions also limit how much you can deposit or how many withdrawals you can make per month, though this is less common now.
You can search for credit unions that serve you at CO-OP.org or Alliant Credit Union's website. Both let you filter by location or employer.
What happens to your rate if the Fed changes policy
The Federal Reserve sets a benchmark interest rate that influences what banks pay on savings accounts. When the Fed raises its rate, banks usually raise savings rates within days or weeks. When the Fed cuts its rate, banks usually cut savings rates within days or weeks, though sometimes they wait longer.
The relationship is not one-to-one. If the Fed cuts rates by 0.5%, your bank might cut your rate by 0.5%, or it might cut by 0.25%, or it might cut by more. Banks compete differently depending on how much deposit money they need. During periods when banks are desperate for deposits, they raise rates faster and cut them slower. During periods when deposits are plentiful, they cut rates faster.
You cannot predict what your bank will do, which is why monitoring rates every few months and being willing to move your money is the best strategy.
Frequently Asked Questions
Can I have high-yield savings accounts at multiple banks?
Yes. You can open accounts at as many banks as you want. Each account is insured separately up to $250,000 by the FDIC or NCUA, so if you have $500,000 to save, you could put $250,000 at one bank and $250,000 at another and both would be fully protected. Some people open accounts at two or three banks to spread their money across the highest rates.
What is the difference between a high-yield savings account and a money market account?
A money market account is a hybrid between a savings account and a checking account. It usually pays interest similar to a high-yield savings account but also comes with a debit card or checks. The tradeoff is that money market accounts sometimes have higher minimum balance requirements or lower withdrawal limits. For most people, a high-yield savings account is simpler.
Do I have to keep a minimum balance to earn the advertised rate?
Most high-yield savings accounts have no minimum balance requirement. However, some banks require a minimum deposit to open the account (often $0 to $25) or require a minimum balance to avoid a monthly fee. Check the bank's terms before opening. If there is a minimum, confirm you can meet it without hardship.
How long does it take to earn interest on a new deposit?
Interest accrues daily starting the day your deposit clears, which is usually one to two business days after you transfer the money. Interest is typically paid monthly, so you will see it added to your account on the first or last day of the month. The exact date depends on the bank.
What if a bank goes out of business?
Your deposits up to $250,000 are protected by the FDIC (for banks) or NCUA (for credit unions). If the bank fails, the insurance agency pays you back in full, usually within a few days. This protection is automatic—you do not have to do anything. Verify the bank is FDIC or NCUA insured before you open an account.