The highest APY right now is found at online banks, not brick-and-mortar branches

Online banks consistently offer the highest APY on savings accounts because they have lower overhead costs than traditional banks with physical locations. As of early 2025, online savings accounts pay between 4.0% and 5.35% APY, while most national banks like Chase, Bank of America, and Wells Fargo pay 0.01% to 0.05%. The difference matters: on $10,000, a 5% account earns $500 per year while a 0.01% account earns $1.

The specific highest rate changes weekly as banks adjust their offerings. Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank have historically competed for the top spot, but you need to check current rates directly on their websites because rates move based on Federal Reserve decisions and bank competition. No single account holds the highest rate permanently.

High-yield savings accounts (HYSA) are the main product offering these rates. They function like regular savings accounts—your money is FDIC insured up to $250,000, you can withdraw anytime without penalty, and there are no minimum balances at most online banks. The trade-off is that you cannot access your money instantly through an ATM or branch; transfers take one to three business days.

Key Takeaways

  • Online banks pay 4% to 5.35% APY on savings accounts, while traditional banks pay less than 0.1%, a difference of thousands of dollars per year on large balances.
  • The highest rate changes weekly, so comparing rates directly on bank websites is the only way to know which account pays most right now.
  • High-yield savings accounts are FDIC insured and have no withdrawal penalties, but transfers take one to three business days instead of being instant.
  • Money market accounts and certificates of deposit (CDs) sometimes pay higher rates than savings accounts, but lock your money away for set periods or charge fees for early withdrawal.

How to compare rates across banks in real time

The best way to find the current highest rate is to visit the savings account pages of major online banks and note their APY. Write down the rate, any minimum balance requirement, and whether they charge monthly fees. Rates listed on comparison websites like Bankrate, DepositAccounts, and NerdWallet are updated daily but lag behind what banks actually offer, so always verify on the bank's own website before opening an account.

Pay attention to the difference between APY and APR. APY includes the effect of compound interest (interest earned on interest), while APR does not. Banks are required to display APY for savings accounts, so that is the number to compare. A 5% APY account will earn more than a 5% APR account over a year.

Check whether the rate is promotional or permanent. Some banks offer a higher rate for the first three to six months, then drop it. Read the account terms or call the bank to ask how long the current rate lasts. A permanent 4.5% rate is more valuable than a 5.35% promotional rate that drops to 3.5% after six months.

Money market accounts and CDs pay higher rates but with restrictions

Money market accounts sometimes pay 0.25% to 0.5% more than high-yield savings accounts at the same bank. They function like savings accounts but often require a higher minimum balance (typically $2,500 to $10,000) and may limit the number of withdrawals per month. If you have a large balance and do not need frequent access, a money market account can earn more.

Certificates of deposit (CDs) pay the highest rates available—currently 4.5% to 5.5% APY—but lock your money for a set term, usually three months to five years. If you withdraw before the term ends, you pay an early withdrawal penalty, typically three to six months of interest. CDs make sense only if you know you will not need the money during the term.

Some banks offer CD ladders, where you open multiple CDs with staggered maturity dates. For example, you might open five one-year CDs, each maturing in consecutive months. As each CD matures, you can withdraw the money or roll it into a new CD at the current rate. This strategy lets you access some money regularly while keeping the rest locked in at higher rates.

Why rates change and how to stay on top of them

Bank APY moves in response to the Federal Reserve's benchmark interest rate, called the federal funds rate. When the Fed raises rates, banks raise their savings rates within weeks. When the Fed cuts rates, banks cut their savings rates within days. The Fed has cut rates several times since 2023, which is why rates have fallen from the 5.3% peak in 2023 to the current 4% to 5.35% range.

You do not need to move your money every time a rate changes by 0.1%, but if you find a bank paying 1% or more above your current account, it is worth transferring. On $50,000, moving from 3.5% to 4.5% earns an extra $500 per year. The transfer itself is free and takes one to three business days.

Set a reminder to check rates every three to six months. Subscribe to rate alerts on Bankrate or DepositAccounts, or simply visit your bank's website quarterly. If your rate drops significantly below the market average, open a new account at a higher-paying bank and transfer your balance. You can keep your old account open if it has no monthly fee, or close it once the transfer clears.

Factors beyond APY that affect which account to choose

The highest APY is not always the best choice if the bank has other drawbacks. Check whether the bank charges monthly maintenance fees, requires a minimum balance, or limits the number of transfers per month. Some online banks charge $5 to $10 per month if your balance falls below a threshold, which erases the benefit of a slightly higher rate.

Consider how you plan to use the account. If you need to move money in and out frequently, a high-yield savings account with unlimited transfers is better than a money market account that limits you to six withdrawals per month. If you are saving for a specific goal one year away, a one-year CD locks in a rate and removes the temptation to spend the money.

FDIC insurance protects your balance up to $250,000 per bank, per account type. If you have more than $250,000, split it across multiple banks or account types (savings, money market, CD) to stay fully insured. All major online banks are FDIC insured; verify this on their website before opening an account.

How to open an account and move your money

Opening an online savings account takes 10 to 15 minutes. You will need your Social Security number, a government-issued ID, your current address, and a funding source (a bank account to transfer money from). Most banks verify your identity instantly and let you start using the account the same day, though transfers take one to three business days to complete.

To move money from your current bank to a new high-yield account, log into your new bank's website and look for "transfer funds" or "link account." You will enter your current bank's routing number and account number. The new bank will initiate the transfer, which usually takes one to three business days. Some banks offer faster transfers through real-time payment networks, but standard ACH transfers are free.

Do not close your old account immediately after the transfer clears. Wait a few days to make sure the transfer went through and no unexpected charges appear. Once you are confident the money arrived safely, you can close the old account online or by phone. Closing an account does not affect your credit score.

Frequently Asked Questions

Can I move my money between accounts if rates change?

Yes, and there is no penalty. Transfers between banks take one to three business days and are free. You can move money as often as you want, though moving frequently to chase small rate increases (0.1% or 0.2%) is not worth the effort. Move when the rate difference is 0.5% or more, or when your current bank's rate drops significantly below the market average.

What happens to my money if the bank fails?

The FDIC insures your balance up to $250,000 per bank, per account type. If the bank fails, the FDIC transfers your money to another bank or sends you a check within days. This has happened fewer than 20 times since 2008, and no depositor has lost money. Verify the bank is FDIC insured before opening an account by checking the FDIC's Bank Find tool on fdic.gov.

Is a CD better than a high-yield savings account?

CDs pay slightly higher rates but lock your money away. Choose a CD if you know you will not need the money for a set period and want to may provide a rate. Choose a high-yield savings account if you might need the money sooner or want flexibility. Some people use both: a CD for money they are definitely saving, and a high-yield savings account for an emergency fund.

Do I have to pay taxes on the interest I earn?

Yes, interest earned on savings accounts is taxable income. The bank will send you a 1099-INT form in January showing how much interest you earned. You report this on your tax return. If you earned $10 or more in interest, the bank must send the form; if you earned less, they may not, but you still owe tax on it.

Why do online banks pay more than traditional banks?

Online banks have no physical branches, so they spend less on rent, staff, and equipment. They pass those savings to customers through higher interest rates. Traditional banks maintain thousands of branches and ATMs, which costs money they recover by paying lower rates. Both types of banks are safe and FDIC insured; the difference is purely operational cost.