Between March 2022 and July 2023, the Federal Reserve raised its benchmark interest rate 11 times. As a result, savings rates rose sharply. And although the Fed has since suspended further rate hikes, savings rates have remained stable. So if you’re looking for the best rates available right now, here’s a breakdown of where to find them.
Savings interest rates today compared to the national average
Although savings rates are high by historical standards, the national average interest rate for savings accounts is still just 0.45%, according to the FDIC. The good news: The best high-yield savings accounts offer an APR of over 5%—more than 11 times the national average.
In fact, the highest savings rate currently available is 5.50% per annum. This is the rate Poppy Bank offers on its Premier Online Savings Account. This rate is guaranteed for three months and there is a minimum deposit of $1,000.
Here’s a look at some of the best savings rates currently offered by our verified partners:
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Remember that it’s important to shop around before opening a savings account. Interest rates vary widely, but there are several banks (especially online banks) and credit unions with extremely competitive offers.
Related: The 10 best savings accounts with high interest rates>>
Do online banks offer the best savings interest rates?
Online banks operate entirely over the internet. This significantly reduces their overhead costs, allowing them to pass these savings on to their customers in the form of high deposit rates and low fees. In fact, many of the best high-interest savings accounts are also available with no monthly fees or minimum deposit requirements. If you’re looking for the best savings rates, online banks are a good place to start.
However, online banks aren’t the only places where you can find savings accounts with interest rates ranging from 4% to 5% APY. Credit unions are nonprofit financial cooperatives and are also known for offering competitive interest rates and lower fees. Many credit unions have certain requirements that must be met to become a member, although there are some that virtually anyone can join.
Read more: Are online banks really safe?
Should you open a savings account?
Savings accounts are one of the safest places to put your money. They are insured by the FDIC (or the NCUA in the case of credit unions), which means your deposits are protected up to $250,000 if your financial institution goes bust. You also can’t lose money due to market fluctuations.
However, a savings account is not always the right choice. Although today’s savings rates are high by historical standards, they still do not offer the same returns you could get by investing your money in the market. To reach your goal, long-term savings goals such as retirement planning require you to invest a large portion of your savings in riskier (but higher-yielding) market investments such as stocks, index funds and mutual funds.
However, if you’re saving for a shorter-term goal like a down payment on a home, a vacation, or even an emergency fund, a high-yield savings account is one of the best options. This is especially true if you want to access your money when you need it. Other types of high-yield deposit accounts, including money market accounts and certificates of deposit (CDs), have more restrictions on withdrawal frequency.
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