Savings accounts occupy a happy medium where your money earns interest, but it’s still easily accessible if needed. The best savings accounts have a high annual percentage yield (APY) combined with low fees. This makes it simple for your money to grow at a reliable rate.
The average savings account interest rate you can get today for accounts with a $2,500 minimum deposit is 0.23%. But the highest rate sits at 5.84%, so shop around before settling on an account.
Savings accounts rates today
| Average APY | High rate | |
|---|---|---|
$2,500 minimum deposit | 0.23% | 5.84% |
$10,000 minimum deposit | 0.24% | 5.35% |
Source: Curinos. The data is accurate as of March 18, 2024
Currently, the national average APY on savings accounts is 0.47% as of March 18, 2024, according to the Federal Deposit Insurance Corp. (FDIC), but you can find accounts with much higher interest rates.
Compared with last week, savings account rates have remained unchanged, with the average interest rate for accounts with a $2,500 minimum deposit sitting at 0.23%. The top rate is 5.84%.
If you have more savings to deposit, you may be able to find a better interest rate. The average interest for accounts with a $10,000 minimum deposit is 0.24%. That is the same as a week ago. The highest rate available for these accounts is 5.35%.
Here’s a look at historical savings rates:
What is a savings account?
A savings account is a deposit account offered by banks and credit unions. Savings accounts pay interest, but often less than other types of accounts like certificates of deposit (CDs). The tradeoff is that you have more flexibility with a savings account because you can access your money quickly.
This access makes savings accounts an ideal place to keep your emergency savings because you can make withdrawals if an unexpected event occurs.
Understanding savings account interest rates
Interest on savings accounts is typically stated in percentages. The national average savings rate is 0.47% according to the FDIC, meaning if you had $10,000 in a savings account with simple interest you would earn $550 in a year.
If your account earns compound interest, the interest you earn gets deposited into your account and then in the next compounding period, you earn interest on that interest. It’s important to note the compounding period of accounts. These periods can be daily, monthly, quarterly or annually, and you’ll make more money if your account compounds more frequently.
If you keep $10,000 in a savings account that earns 4% interest compounded annually for 10 years, you would earn $4,802.44 in interest. If your interest is compounded daily, you would earn $4,917.92 in interest. That may not seem like a huge difference, but it adds up as you increase your savings over time.
Role of Federal Reserve in savings account rates
While not directly tied, savings account rates are linked to the rates the Federal Reserve, or Fed, sets. When the Fed raises its rate, banks and credit unions usually pay more interest on your savings.
However, because they’re not directly tied, you often won’t see those higher interest rates right away after the Fed raises rates and when you do, they often won’t be as dramatic as the Fed rate increases. This is because the Fed’s interest rate hikes are only one factor in why a financial institution might change its rates.
Rate increases typically happen when a financial institution needs more deposits. While bank reserves have steadily gone down in the past two years, many banks still have large deposits in their reserves compared to four years ago. This means savings account rates may not necessarily increase if the Fed raises its rate again.
Methodology
Curinos focused on savings accounts intended for personal use to find the average savings account rates. Savings accounts that fall into specific categories are excluded, including promotional offers, relationship-based accounts, private, youth, senior and student/minor.
Frequently asked questions (FAQs)
The national average APY on savings accounts is 0.47% as of March 18, 2024, according to the Federal Deposit Insurance Corporation (FDIC). But keep in mind that you may be able to get a much higher interest rate by shopping around.
There are many factors that determine savings account interest rates. One factor is supply and demand. If financial institutions need more deposits, they may offer higher rates. Savings account rates are also linked to moves in rates the Fed sets. When the Fed raises rates, savings account rates usually follow.
No, all banks do not offer the same savings account rates. Online banks generally offer higher rates than traditional, brick-and-mortar banks because they have fewer overhead costs.
If you want higher returns than a savings account, you can explore other account types like a money market account or CD. All types of accounts have pros and cons, so explore them fully to see which matches best with your financial situation and needs from the account.
