Thanks to a spike in interest rates the past few years, Americans have become more savvy when it comes to finding attractive rates. But what is a good interest rate on a savings account? And how can you get one?
[See: Best High-Yield Savings Accounts]
What Is a Good Interest Rate on a Savings Account?
In 2024, you’ll typically find the best savings interest rate offered by what’s known as a high-yield savings account. A high-yield savings account offers much higher than average annual percentage yields than a traditional savings account does.
In September 2024, the average interest rate for a savings account in the U.S. stood at 0.46%, according to the Federal Deposit Insurance Corp. By comparison, interest rates for some high-yield savings accounts exceed 4.50%.
Vanessa Potter, assistant vice president and branch manager at Addition Financial Credit Union, pegs the best interest rate for a savings account at 4.00% or more. “To find the best interest rates on savings accounts, you need to research and take your time during the process,” she advises.
The table below shows a sampling of recent rates for high-yield savings accounts.
| Financial institution | Name of savings account | APY for high-yield savings |
| Bask Bank | Interest Savings Account | 4.85% with no minimum balance or deposit |
| BMO Alto | Online Savings Account | 4.60% with no minimum balance or deposit |
| BrioDirect | High-Yield Savings Account | 5.15% with minimum deposit of $5,000 |
| CIT Bank | Platinum Savings Account | 4.70% with minimum deposit of $100 and minimum balance of $5,000 |
| EverBank | Performance Savings Account | 5.05% with no minimum balance or deposit |
| My Banking Direct | High Yield Savings Account | 5.00% with minimum balance of $1.00 and minimum deposit of $500 |
| Popular Direct | Select Savings Account | 4.85% with minimum balance of $0.01 and minimum deposit of $100 |
[Read: Best Online Banks.]
How to Get the Best Interest Rate for a Savings Account
Traditional brick-and-mortar banks typically provide lower interest rates, so if you’re hunting for the best interest rate for a savings account, your best bet is likely a high-yield savings account at an online-only bank.
Because online banks don’t operate branches staffed by workers, they can pass along these cost savings to depositors in the form of more generous interest rates. Data published by National Bureau of Economic Research shows that, following an interest rate increase carried out by the Federal Reserve, online banks tend to hike interest rates more than traditional banks. Online banks also attract younger, higher-income customers who are inclined to shop around for higher interest rates, and so they boost their rates to attract and keep customers.
According to Gary Zimmerman, founder and CEO of MaxMyInterest.com, “Brick-and-mortar banks typically pay rates that are well below the rate of inflation, which means you’re losing purchasing power every day.”
“While you might want to keep your main checking account at a brick-and-mortar bank, online banks have lower operating costs, and so they’re able to pay higher rates on savings,” he adds. “So savvy savers might want to open multiple accounts — a core brick-and-mortar checking account plus higher-yielding online savings accounts.”
Other types of savings accounts that might deliver attractive interest rates are money market accounts and certificates of deposit.
When you’re seeking a place to put your savings, look for financial institutions whose deposits are federally insured and that don’t charge monthly fees or require minimum balances, says Zimmerman. In addition, be sure the interest rates being advertised apply to all savings balances.
[Read: Best Savings Accounts.]
The Future of Savings Account Interest Rates
Unfortunately, interest rates for savings accounts are set to continue dropping since the Federal Reserve cut rates after meeting in September.
Matt Schulz, chief credit analyst at LendingTree, says, “Plenty of financial institutions trimmed their rates a bit early, knowing that a rate cut was imminent.”
The Fed lowered the range its benchmark rate by half a percentage point, an aggressive move made with the belief that inflation is under control. While the cut helps out credit card users and borrowers, not everyone comes out a winner.
Savers who have or are looking for a high-yield savings account will find that rates are falling from their recent peak. However, Schulz says not to panic.
“Returns aren’t going to go from awesome to awful overnight. You’ve still got time to reap some pretty strong returns from high-yield savings accounts, even if those returns aren’t as high as they were a month or two ago,” he says.
While the short-term future doesn’t bring too much worry, rates are set to keep falling throughout the next few months. Schulz recommends acting quickly if you want to take advantage of what a high-yield savings account can offer over a traditional savings account.
“High-yield savings accounts are definitely still worth it,” he says. “They’re still in many cases giving way better returns than you’d get from savings accounts at the big banks. The bottom line is that if you haven’t shopped around to compare savings rates in the past few years, you’ve likely left money on the table, and that’s something none of us can afford.”
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What Is a Good Interest Rate on a Savings Account? originally appeared on usnews.com
Update 10/09/24: This story was previously published at an earlier date and has been updated with new information.
