Current rates and where to find them

The highest yield savings accounts right now are offered by online banks and credit unions, with rates that change weekly based on what the Federal Reserve does with interest rates. As of early 2024, the top accounts pay between 4.5% and 5.35% annual percentage yield (APY), though the exact rate you see depends on the bank, the day you check, and sometimes how much you deposit.

You will not find the highest rates at the big national banks — Chase, Bank of America, and Wells Fargo typically pay 0.01% to 0.05% APY on savings accounts. Online banks like Marcus, Ally, and American Express Personal Savings consistently rank at or near the top because they have lower overhead costs and pass those savings to depositors through higher rates.

The fastest way to compare current rates is to check sites that track them in real time: Bankrate, DepositAccounts, and the Federal Deposit Insurance Corporation (FDIC) website all update rates daily. When you find a rate you like, go directly to that bank's website to confirm the rate has not changed since the comparison site last updated.

Key Takeaways

  • Online banks and credit unions offer the highest rates, typically 4.5% to 5.35% APY, while traditional brick-and-mortar banks pay under 0.1% APY.
  • Rates change weekly and depend on Federal Reserve policy, so the highest rate today may not be the highest next month.
  • All deposits up to $250,000 per account owner are insured by the FDIC at banks and by the National Credit Union Administration (NCUA) at credit unions, so safety does not vary by rate.
  • Some banks require a minimum deposit to open an account or to earn the advertised rate, so read the fine print before you move money.
  • You can move money between savings accounts without penalty, so switching to a higher rate when one becomes available costs you nothing.

Why online banks pay more than traditional banks

Online banks have no physical branches, no tellers, and no real estate costs. That means they spend far less money to operate than a bank with hundreds of locations. They pass most of that savings to customers through higher interest rates on savings accounts and lower fees on checking accounts.

Traditional banks use deposits to fund loans — mortgages, car loans, credit cards — and they keep the difference between what they pay you in interest and what they charge borrowers. Online banks do the same thing, but because their costs are lower, they can afford to pay you more and still make a profit.

Credit unions operate on the same principle but are owned by their members rather than shareholders. Some credit unions offer rates as high as online banks, though you usually have to join the credit union first (membership requirements vary widely — some are open to anyone in a geographic area, others require you to work for a specific employer or belong to a specific organization).

How to read the fine print before you move money

The advertised APY is the rate you will earn if you keep money in the account for a full year without touching it. That rate is may provide for the term stated, but banks can change rates on savings accounts at any time — they do not have to give you advance notice. Read the account agreement to see whether the bank has changed rates in the past and how often.

Check whether there is a minimum deposit required to open the account and whether you need to maintain a minimum balance to keep earning the advertised rate. Some banks advertise a high rate but only pay it on balances above $25,000 or $100,000. If your balance drops below that threshold, the rate drops too.

Look for monthly fees, withdrawal limits, and transfer restrictions. Most high-yield savings accounts have no monthly maintenance fee, but some charge a fee if you do not maintain a minimum balance. The FDIC limits you to six withdrawals or transfers per month from a savings account (though this rule is less strictly enforced now than it was before 2020), so if you plan to move money frequently, ask the bank whether they enforce that limit.

What happens when the Federal Reserve changes rates

The Federal Reserve sets a target range for the federal funds rate — the interest rate banks charge each other for overnight loans. When the Fed raises or lowers that rate, banks usually raise or lower the rates they pay on savings accounts within days or weeks.

If the Fed is raising rates, the highest-paying accounts will likely get even higher. If the Fed is cutting rates, expect the rates on all savings accounts to fall. You can track the Fed's decisions on the Federal Reserve's official website, which publishes the target range after each meeting.

Because rates move together, switching banks to chase a slightly higher rate usually does not pay off — by the time you move your money, rates may have shifted again. The exception is if one bank is consistently 0.5% or higher above the others, which occasionally happens. In that case, the difference is large enough to justify the move.

How much more you earn with a high-yield account

The difference between a high-yield account and a traditional bank account adds up quickly. On $10,000, the difference between 5% APY and 0.05% APY is about $500 per year. On $50,000, it is about $2,500 per year. On $100,000, it is about $5,000 per year.

That money comes from the bank, not from you — you are simply earning the interest that the bank is willing to pay. The higher the rate, the more of the bank's profit you capture.

Use an online calculator to see what your specific balance would earn at different rates. Most banks and comparison sites have calculators built in. Plug in your balance and the APY, and the calculator shows you the interest earned over one month, one year, or any period you choose.

Moving money between accounts without losing interest

You can move money from one savings account to another without penalty or loss of interest. The interest you have already earned stays with you, and the new account starts earning interest at its rate as soon as the money arrives.

Transfers between banks usually take one to three business days using an external transfer or ACH (Automated Clearing House) transfer. Some banks offer faster transfers if you set up a link between accounts in advance. During the transfer, your money is in transit and earning nothing, so the timing matters only if you are moving very large amounts.

If you want to move money quickly and keep it earning interest the whole time, you can withdraw cash and deposit it at the new bank, though this method is slower and riskier than an electronic transfer. Most people use ACH transfers and accept the one- to three-day gap.

Frequently Asked Questions

Is my money safe in a high-yield savings account?

Yes, as long as the bank is FDIC-insured or the credit union is NCUA-insured. Both agencies insure deposits up to $250,000 per account owner per institution. If the bank fails, you get your money back. The interest rate has no bearing on safety — a 5% account is just as safe as a 0.05% account at an insured institution.

Can I withdraw money from a high-yield savings account whenever I want?

Yes, but check the bank's withdrawal policy first. Most high-yield savings accounts allow unlimited withdrawals and transfers, though some older accounts still enforce the six-per-month limit. You can withdraw all your money at any time without penalty, though the bank may take one to three business days to process the transfer to another account.

What if the rate drops after I open the account?

The bank can lower the rate at any time, and you have no recourse. You are not locked into the advertised rate. If rates drop and you want to keep earning more, you can move your money to a different bank that still offers a higher rate. There is no penalty for closing a savings account.

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

Yes, interest from a savings account is taxable income. The bank will send you a 1099-INT form at the end of the year showing how much interest you earned, and you report that on your tax return. The amount of tax you owe depends on your tax bracket and total income.

What is the difference between APY and APR?

APY (annual percentage yield) includes the effect of compounding — interest earned on interest. APR (annual percentage rate) does not. For savings accounts, always look at APY, because that is the actual amount you will earn. APR is used for loans and credit cards, where it works differently.