Rates on savings accounts are going up. You can now earn 4.22% or higher on your savings.
Shopping for an account where you can save for a rainy day or retirement? Here’s a look at some of the best savings rates you’ll find today.
Related: Compare the Best High-Yield Online Savings Accounts
Traditional Saving Account Rates Today
Traditional savings accounts, called “statement savings accounts” within the banking industry, have been infamous for paying teensy interest in recent years. That’s now changing, thanks to the Fed’s campaign of interest rate hikes to combat inflation.
Today’s highest APY on a standard savings account with a $2,500 minimum deposit requirement is 4.22%, according to data from Curinos. If you land a basic savings account with a rate in that ballpark, you’ve found a good deal. One week ago, the best yield was 4.18%.
But today’s average APY for a traditional savings account is 0.22%, Curinos says, and that’s up from 0.22% a week ago. APY, or annual percentage rate, reflects 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 often pay considerably higher interest than a conventional savings account. But the trade-off is you’ll have to meet tough requirements set by the bank or credit union. Often, that means making a large deposit to open the account.
On high-yield accounts requiring a minimum deposit of $10,000, today’s best interest rate is 4.22%. That’s up from 4.18% one week ago.
The average APY for those accounts is now 0.22% APY, about the same as a week ago.
On high-yield savings accounts with a minimum opening deposit of $25,000, the highest rate offered today is 4.22%. You’ll do well if you can nail down an account with a rate close to 4.22%. Last week at this time, the best rate was 4.18%.
The current average is 0.23% APY for a high-yield account with a $25,000 minimum deposit. That’s above last week’s 0.22%.
Money Market Account Savings Rates Today
Money market accounts (MMAs) are savings accounts that have some of the properties 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 0.63%, versus 0.42% for a traditional savings account.
But today, the best money market accounts have rates as high as 5.05%. That’s steady with the top rate of 5.05% from one week ago.
The average APY for an MMA is now 0.51%, up from 0.51% last week at this time, according to Curinos.
Related: Savings Rates Forecast July 25, 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.
Methodology
Curinos determines the average rates for savings accounts by focusing on those intended for personal use. Certain types of savings accounts—such as those including promotional offers, relationship-based accounts, private, youth, senior and student/minor—are not considered in the calculation.
