Key takeaways
- The top high-yield savings accounts are currently earning APYs of 5 percent and greater.
- By comparison, the national average savings account APY is just 0.59 percent.
- You'll often find the most competitive APYs at online-only banks, which tend to pay higher rates than brick-and-mortar banks.
These days, it’s possible to find high-yield savings accounts that earn up to nine times the return they earned just a few years ago. Such elevated yields, along with federal deposit insurance, can make a savings account the best place to earn interest on funds earmarked for emergencies or other near-term financial goals.
What is a good savings account interest rate?
You’ll currently find high-yield savings accounts that earn annual percentage yields (APYs) of up to 5.35 percent. Such accounts are often available from online-only banks and credit unions.
It pays to shop around for an account that earns a high yield, given it’s not uncommon for savings accounts to earn much lower rates. For instance, the national average APY is just 0.58 percent, while many brick-and-mortar banks offer savings accounts earning just 0.01 percent APY — which is at least 500 times lower than the top available rates.
Unlike accounts that earn average or rock-bottom yields, many high-yield savings accounts are earning a rate that’s outpacing inflation — which is currently at an annual rate of 3.5 percent. Money that doesn’t keep up with inflation is losing purchasing power.
What would a savings account with a 5% APY earn in a year?
Putting money into a high-yield savings account today and leaving it there for a year is an easy way to build up your nest egg. While savings account APYs are variable — meaning the bank can raise or lower them any time at will — here’s approximately what various amounts would earn in interest in one year in a savings account that pays a 5 percent APY:
- $5,000: $256
- $10,000: $512
- $15,000: $767
- $20,000: $1,023
Where to find the best interest rate on a high-yield savings account
Savings account rates of up to 5.35 percent APY are currently offered by various banks, including the following:
| Savings account | APY | Required minimum deposit |
|---|
| BrioDirect High-Yield Savings | 5.35% | $5,000 |
| TAB Bank High Yield Savings | 5.27% | $0 |
| UFB Direct Secure Savings | 5.25% | $0 |
| EverBank Performance Savings | 5.15% | $0 |
| CIBC Bank USA Agility Account | 5.01% | $1,000 |
Note: Annual percentage yields (APYs) shown are as of April 11.
What the current rate environment means for savings accounts
Rates on high-yield savings accounts tend to move in lockstep with changes to the federal funds rate. This key benchmark rate is currently at a 23-year high after the Federal Reserve raised it 11 times in 2022 and 2023. Since July 2023, however, the Fed has held rates steady — and it may hold off on rate cuts in the near future due to lingering inflation.
In recent months, APYs have slipped slightly on some high-yield savings accounts, although it’s still easy to find an account with a rate that outpaces inflation.
“Persistent inflation will keep the Fed from cutting interest rates as soon, or as much, as many had hoped,” says Greg McBride, CFA, Bankrate chief financial analyst. “For savers, this means those high-yield savings accounts paying over 5 percent aren’t going away any time soon.”
Is a CD a good alternative to a savings account?
Because savings account APYs are variable, many savers consider a high-yielding, fixed-rate certificate of deposit (CD) if they believe savings account rates will fall soon. Top-yielding CDs are currently earning up to 5.36 percent APY. A CD usually guarantees the same rate for the entire duration of its term.
While it can pay to lock in a high yield, note that most CDs charge an early withdrawal penalty if you take out the money before the term is up. For this reason, a CD isn’t a good place for your emergency fund or other money you might need access to in the meantime.
Bottom line
It’s not hard to find high-yield savings accounts these days that earn upwards of 5 percent APY. Because standard savings accounts commonly earn the national average of 0.58 percent APY or less, it’s worth your time to shop around for an account that earns a highly competitive rate.
FAQs
The top high-yield savings accounts are currently earning APYs of 5 percent and greater. By comparison, the national average savings account APY is just 0.59 percent. You'll often find the most competitive APYs at online-only banks, which tend to pay higher rates than brick-and-mortar banks.
What is a reasonable interest rate for a savings account? ›
Key Takeaways
Savers can still snag interest rates above 5.00%. The average national interest rate for savings is 0.45%. Interest rates for savings accounts might drop in 2024.
Is 5% good for a savings account? ›
Typically, the best 5% interest savings accounts offer a higher interest rate for lower account balances and reduce the interest rate significantly if you keep a high account balance. If you maintain a high account balance, you might prefer a bank account that offers the same APY regardless of your account balance.
Which bank gives 7% interest on savings accounts? ›
Suryoday Small Finance Bank pays the highest interest rate of 7.00% on savings account balances ranging from Rs 5 lakh to Rs 2 crore, and 6.75% on balances ranging from Rs 1 lakh to Rs 5 lakh. EASAF Small Finance Bank offers interest up to 7.5 percent on savings accounts on balances from 10 crore to less than 2 crores.
Who pays 7% interest on savings? ›
Currently, no banks are offering 7% interest on savings accounts, but some do offer a 7% APY on other products. For example, OnPath Federal Credit Union currently offers a 7% APY on average daily checking account balances up to and under $10,000.
What is a really good savings rate? ›
At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.
What is considered a good amount in savings account? ›
Most financial experts suggest you need a cash stash equal to six months of expenses: If you need $5,000 to survive every month, save $30,000.
Should I keep $10,000 in savings? ›
First things first: There's nothing wrong with keeping $10,000 in a savings account. If you're working with a reputable bank, your money will have Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per person per account ($500,000 for joint accounts). This protects your money even if the bank fails.
What is the 7 rule for savings? ›
The seven percent savings rule provides a simple yet powerful guideline—save seven percent of your gross income before any taxes or other deductions come out of your paycheck. Saving at this level can help you make continuous progress towards your financial goals through the inevitable ups and downs of life.
How much should a 50 year old have in savings account? ›
By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month. Also, be sure to take advantage of retirement plans and high-interest savings accounts.
Best High-Yield Savings Account Rates for June 2024
- My Banking Direct – 5.55% APY.
- Poppy Bank – 5.50% APY.
- Forbright Bank – 5.30% APY.
- Vio Bank – 5.30% APY.
- North American Savings Bank – 5.30% APY*
- BrioDirect – 5.30% APY.
- Ivy Bank – 5.30% APY.
- TAB Bank – 5.27% APY.
Institutions such as HDFC Bank, ICICI Bank, and State Bank of India (SBI) are known for their attractive interest rates and substantial branch networks. Kotak Mahindra Bank is known for its digital financial services, whereas Axis Bank provides flexible savings alternatives.
Which bank is best for savings? ›
Compare Savings Accounts up to 5.75%
| Bank | Savings Account | Max Interest Rate |
|---|
| ING | ING Savings Maximiser (<$100k) | 5.50% p.a. |
| BOQ | BOQ Future Saver Account ( < $50k) | 5.50% p.a. |
| MOVE Bank | MOVE Bank Growth Saver ($1 - $25k) | 5.50% p.a. |
| Rabobank Australia | Rabobank Australia PremiumSaver (Amounts < $250k) | 5.45% p.a. |
27 more rowsHowever, savings accounts that pay interest annually typically offer more competitive interest rates because of the effect of compounded interest. In simple terms, rather than being paid out monthly, annual interest can accumulate over the year, potentially leading to higher returns on the sum you've invested.
How much interest would $1000 make in a savings account in one year? ›
If you deposit $1,000 in a high-yield savings account with an APY of 4.50%, compounded annually, you would earn approximately $45 in interest in one year. This calculation assumes the APY remains constant and no additional deposits or withdrawals are made.
How much should I put in a high yield savings account? ›
For savings, aim to keep three to six months' worth of expenses in a high-yield savings account, but note that any amount can be beneficial in a financial emergency. For checking, an ideal amount is generally one to two months' worth of living expenses plus a 30% buffer.
What is a good interest rate on savings? ›
The best easy-access accounts
| Provider | Account name | Interest rate (AER) |
|---|
| Ulster Bank | Loyalty Saver | 5.20% |
| Chase | Chase Saver (Boosted Rate Offer) | 5.10% |
| Chase Bank Sponsored | Chase Saver Boosted Rate * | 5.10% |
4 more rowsJun 19, 2024
All banks set interest rates on their savings accounts that usually vary from 2.60% per annum to 7.50% per annum depending on the amount of savings. How to calculate interest on savings account for varying interest rates?
Is 4% a good savings rate? ›
Is 4% a high rate? In a word, yes. The national average savings rate as of April 2023 is 0.39% APY, according to the Federal Deposit Insurance Corp.
Is 4.35 good for a savings account? ›
Currently, the best savings accounts are paying as much as 5.26% APY. Citi's savings account APY is not that high, but it's competitive. Citibank deserves to be in the conversation with the best savings accounts -- 4.35% APY is pretty good, especially for a national brick-and-mortar bank.
