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.
Which bank gives 7% interest on savings accounts? ›
As of May 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
What is an average savings account interest rate? ›
The average savings account in the U.S. has an interest rate of 0.45% APY. But the type of savings account you have has a big impact on your interest rate. Switching your savings from a traditional savings account to a high-yield savings account could help your money grow much quicker.
Is 3% a good savings rate? ›
Best high-yield and online savings accounts
An online bank can offer higher rates since it doesn't have the same costs as brick-and-mortar banks. What is a good interest rate for a savings account? While the average savings rate is 0.46%, the best high-yield savings accounts offer an APY ranging from 4.25% to 5.26%.
Is 5% good for a savings account? ›
So, if you earn 5% on yours, you're not only beating the national average savings account return by more than 10 times, but you're enjoying one of the most competitive rates on the leading high-yield savings account options.
How can I earn 7% on my money? ›
Savings accounts that earn interest in the neighborhood of 7% are considered high-yield savings accounts. These accounts are often found at online banks and smaller credit unions.
Which bank is paying highest interest on savings account? ›
Summary of Best High-Yield Savings Accounts of 2024
| Account | Forbes Advisor Rating | Annual Percentage Yield |
|---|
| TAB Bank High Yield Savings | 4.5 | 5.27% APY |
| EverBank Performance℠ Savings | 4.5 | 5.15% APY |
| Varo Savings Account | 4.5 | 3.00% to 5.00% APY |
| Laurel Road High Yield Savings® | 4.5 | 5.15% APY |
6 more rowsThe 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
What is the ideal savings rate by age? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary.
How much savings should I have at 50? ›
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.
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.
Do you pay taxes on a high yield savings account? ›
If you plan to take advantage of high interest rates this year, you might be wondering if your high-yield savings account interest is taxable. The answer is yes, but these types of accounts can offer the potential for significant savings, so don't let that discourage you from opening one.
Is 5000 in savings a lot? ›
About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well.
Which bank gives 7% interest per month? ›
IDFC FIRST Bank offers interest rate up to 7% on balances more than Rs 10lac to less than Rs 5 crore. The new rates are effective from July 1, 2023.
Can you get 7% interest? ›
One of the best deals is the First Direct Regular Saver which has an interest rate of 7%. This account has a maximum monthly deposit of £300 but, could earn you an additional £136.50 in a year if you were to put £300 into the account each month over a 12 month period.”
Which bank gives 8% interest? ›
Top 20 Scheduled Banks offering Best FD Rates
| Banks | Highest FD rate (% p.a.) | 3-year FD rate (% p.a.) |
|---|
| Fincare Small Finance Bank | 8.00 | 7.50 |
| RBL Bank | 8.00 | 7.50 |
| AU Small Finance Bank | 8.00 | 7.50 |
| IDFC First Bank | 7.90 | 7.25 |
16 more rowsRight now, there aren't any financial institutions offering 7% interest on a CD. Alpena Alcona Area Credit Union, a local financial institution in Michigan, previously offered a 7.19% APY on a 7-month CD special, but that offer has ended. There are a few financial institutions with CDs paying 6% APY or more, though.
