Rates on savings accounts are going down, even as the Federal Reserve raises interest rates. You can now earn 4.89% or higher on your savings.
In the market for an account where you can put some money aside? Here’s a look at some of the best savings rates you’ll find today.
Related: Compare the Best High-Yield Online Savings Accounts
Quoted rates are based on the highest clicked-on rate for each savings type. For banks and credit unions offering the top rates, check out our list of the best high-yield savings accounts.
Savings Rates Today: Traditional Savings Account
Traditional savings accounts, called “statement savings accounts” within the banking industry, have been known for paying teensy interest in recent years. That’s gradually changing, thanks to the Fed.
Today’s highest interest rate on a standard savings account is 4.89%, according to data from Bankrate.com. If you score a basic savings account with a rate in that ballpark, you’ve found a good deal. One week ago, the best rate was 4.80%.
The national average rate is just 0.40%, according to the most recent data from the FDIC, the government agency that insures bank deposits. But today’s average APY for a traditional savings account is 1.47%, Bankrate says, and that’s down from 1.48% a week ago.
APY, or annual percentage rate, depicts the actual return your account will earn during one year. It factors in compound interest, which is the interest that builds up on the interest in your account.
High-Yield Savings Account Rates Today
High-yield savings accounts generally pay much higher interest than a conventional savings account. But the trade-off is you’ll have to meet strict conditions laid down by the bank or credit union. Often, that means making a large deposit to open the account.
The average APY for high-yield accounts requiring a minimum deposit of $10,000 is now 0.25% APY, the same as a week ago.
The current average is 0.50% APY for a high-yield account with a $25,000 minimum deposit. That’s the same as last week’s APY.
Money Market Account Savings Rates Today
Money market accounts (MMAs) are savings accounts that mix in some of the features of checking accounts. Typically, you can write checks and enjoy debit card privileges.
MMAs tend to pay somewhat higher interest than a standard savings account. The FDIC says the average MMA rate is 0.59%, versus 0.40% for a traditional savings account.
But today, the best money market accounts have rates as high as 4.07%. That’s below the top rate of 4.75% from one week ago.
The average APY for an MMA is now 0.53%, down from 0.54% last week at this time, according to Bankrate.
Related: Savings Rates Forecast 2023
How to Shop for a Savings Account
To find the best savings account for your needs, you first must answer the question: What exactly are you looking for?
An account where you can do your banking in person, at a branch? That would rule out online-only banks. An account that allows for easy withdrawals? That could rule out any account that limits your monthly transactions. An account that pays decent interest? That would rule out a traditional savings account at one of the big banks, because you’re likely to earn just 0.01% or 0.02% APY.
Don’t settle on any option until you’re certain you have a good grasp on the fees you’ll be charged. Savings accounts can ding you with monthly service fees, excess withdrawal fees and returned item fees (if you deposit checks that bounce), among others. Those charges add up and can gnaw away at your savings.
As you shop around, check reviews and ratings of financial institutions and make sure you choose one that will protect your money with federal insurance—from the FDIC or, in the case of credit unions, the NCUA.
How High Can Savings Rates Go?
That’s tough to say—it depends on the path of inflation and the overall economy.
The highest interest rates in recent memory were seen in 1980 and ‘81, when the Fed sent its federal funds rate soaring above 19%. That was in the face of runaway inflation that had prices rising at an annual rate of more than 14%.
In the early 1980s, the typical five-year CD was paying close to 12%, compared to less than 2% today, according to Bankrate data. Savings rates would eventually fall as inflation cooled off and the federal funds rate was brought back down.
