If you have savings that you want to protect against market fluctuations but still earn a generous return, consider a high-yield savings account. These accounts work the same as traditional savings accounts but pay much higher interest—around 5% APR and more in some cases.
However, interest rates on savings accounts vary widely, so it’s important to do your research and find a good rate. Don’t know where to start? Here’s a more detailed overview of current interest rates on savings accounts and where to find the best deals.
Where can you find the best savings interest rates today?
The average interest rate on a traditional savings account is just 0.46%, according to the FDIC. However, the best savings rates can be found in high-yield accounts, which often pay between 4.5% and 5% APY or even more.
These top rates are generally offered by online banks, but you can also find favorable rates at some credit unions and regional banks.
For example, Poppy Bank currently offers the highest savings rate at 5.50% per annum on its Premier Online Savings Account. The minimum deposit is $1,000 and this rate is guaranteed for three months.
Betterment also offers a 5.50% APY account, but this is a cash management account for brokerage clients and not a traditional savings account. There is no minimum deposit required.
Here’s a look at some of the best savings rates currently offered by our verified partners:
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Related: The 10 Best High-Yield Savings Accounts Available Today>>
Historical savings account interest rates
Over the last decade, savings account interest rates have fluctuated quite a bit. From 2010 to about 2015, interest rates were at their lowest, hovering around 0.06% to 0.10%. This was largely due to the 2008 financial crisis and the Federal Reserve’s decision to cut its benchmark interest rate to near zero in an effort to stimulate economic growth.
From 2015 to 2018, interest rates began to rise gradually. However, they remained low by historical standards. Then, the outbreak of the COVID-19 pandemic in 2020 led to another sharp decline in interest rates as the Fed cut rates again to stimulate the economy. This brought average savings rates to new lows, around 0.05% to 0.06% by mid-2021.
Since then, savings account rates have recovered significantly, largely due to the Fed’s rate hikes in response to rapidly rising inflation.
Below you can see how savings interest rates have changed over the last decade:
Is a high-interest savings account right for you?
Although interest rates have increased significantly since 2021, the average interest rate on savings accounts is still relatively low, especially compared to market investments. If you’re saving for a long-term goal like a child’s education or retirement, a savings account probably won’t generate the return needed to reach your goal.
On the other hand, if you’re saving for an emergency fund, a down payment on a home, a vacation or another short-term goal, a high-yield savings account is ideal — especially if you want to access the funds when you need them. Other types of deposit accounts, including money market and CD accounts, may offer similar or even better interest rates, but limit the frequency of withdrawals. The key is to shop around and find an account that offers a competitive interest rate with little or no fees.
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