3.75% APY is competitive for savings accounts, but whether it's good depends on what banks are offering at this moment and what type of account you're using

A 3.75% annual percentage yield (APY) on savings is solid compared to the rates most traditional banks offered before 2022. However, the savings account market moves constantly. Online banks and credit unions regularly shift their rates based on what the Federal Reserve does with interest rates. To know if 3.75% is genuinely good right now, you need to check what other banks are currently offering—not what they offered last month.

The practical question is simpler: if your bank is paying 3.75% and you can find 4.25% elsewhere, the difference matters. On $10,000, that's $50 per year in your pocket. On $50,000, it's $250. Those gaps compound over time, so it's worth a quick search before you settle.

Key Takeaways

  • 3.75% APY is reasonable for savings accounts in the current market, but rates from online banks and credit unions often exceed this.
  • The Federal Reserve's interest rate decisions drive what banks pay on savings, so rates change throughout the year.
  • Comparing rates across at least three banks takes 15 minutes and can show you whether you're leaving money on the table.
  • A high-yield savings account (HYSA) at an online bank typically pays more than a traditional bank's savings account, though both are FDIC-insured up to $250,000.
  • The difference between 3.75% and 4.50% adds up: on $25,000, that's roughly $190 per year in extra interest.

How 3.75% compares to what banks are paying now

In late 2023 and early 2024, online banks and credit unions were offering rates between 4.25% and 5.35% on high-yield savings accounts. Traditional brick-and-mortar banks typically paid less—often 0.01% to 0.50% on regular savings accounts. If your bank is offering 3.75%, it's above the traditional bank average but below what you can find at online competitors.

The gap matters most if you're holding a large balance. A $50,000 deposit earning 3.75% generates $1,875 per year. The same $50,000 at 4.75% generates $2,375—a difference of $500 annually. Over five years, that's $2,500 you didn't earn by staying put.

Check current rates at online banks like Marcus, Ally, American Express Personal Savings, or Wealthfront, and at credit unions through sites like DepositAccounts or BankRate. Rates shift weekly, so what's true today may change in two weeks.

Why rates change and what affects your bank's offer

Banks set savings rates based on the federal funds rate, which the Federal Reserve adjusts to manage inflation and economic growth. When the Fed raises rates, banks compete to attract deposits and typically raise what they pay you. When the Fed cuts rates, banks lower their offers. Your bank's specific rate also depends on how aggressively they want to attract new customers and how much deposit money they already have.

Online banks tend to pay more than traditional banks because they have lower overhead—no branches, fewer employees, lower rent. They pass some of that savings to you as higher interest rates. Credit unions, which are member-owned nonprofits, sometimes pay competitive rates too, especially if you meet membership requirements.

The type of account also matters. A money market account might pay differently than a standard savings account. A certificate of deposit (CD) locks your money away for a set term but often pays more. A regular checking account almost never pays meaningful interest.

What to do if 3.75% seems low

Open a high-yield savings account at an online bank or credit union. The process takes 10 to 15 minutes online. You'll need your Social Security number, a government ID, and proof of address. Transfers from your current bank take one to three business days. Your money stays insured by the FDIC (or NCUA for credit unions) up to $250,000, so moving it is safe.

You don't have to close your current account. Many people keep a checking account at their traditional bank for convenience and move savings to a higher-paying online account. You can also split your savings across multiple banks to stay under the $250,000 insurance limit if you have a large balance.

If you need the money within a year or two, a high-yield savings account is better than a CD because you can withdraw without penalty. If you won't touch the money for three years or longer, compare CD rates—they often pay 4.50% to 5.50% for terms of one to five years.

The real cost of staying with a lower rate

The difference between 3.75% and 4.75% doesn't sound like much, but it compounds. On $20,000 over three years, 3.75% earns you $2,287 in total interest. At 4.75%, you earn $2,987—a difference of $700. On $100,000 over five years, the gap grows to $5,000 or more.

That money is yours to earn. Your bank isn't doing you a favor by paying you interest—they're paying you because they want to use your deposit. If they're not paying competitively, they're keeping more of the profit for themselves.

When 3.75% might actually be good enough

If your bank is offering 3.75% and you have a small balance—say, $2,000 to $5,000—the annual difference between 3.75% and 4.75% is only $20 to $50. The hassle of moving money might not be worth it to you. But if you have $10,000 or more sitting in savings, the math shifts. A few minutes to open an account elsewhere could earn you $100 to $500 per year with no extra work.

Also consider convenience. If you use your bank's app daily, have a mortgage there, or value in-person service, staying might make sense even if the rate is slightly lower. But if you're only using the savings account to hold money, rate shopping is worth your time.

How to compare rates without getting lost

Use a rate comparison site like DepositAccounts, BankRate, or NerdWallet to see what banks are offering today. Filter by account type (savings, money market, CD) and term length. Write down the top five rates. Then visit each bank's website directly to confirm the rate, check the minimum deposit requirement, and read the fine print about how interest is calculated and paid.

Most online banks pay interest monthly or daily. Some traditional banks pay quarterly. More frequent compounding means slightly more money in your pocket, though the difference is small. What matters most is the base rate—the APY itself.

Open an account at the bank with the best rate for your situation. You can move your money gradually or all at once. Set a reminder to check rates again in six months, because the best bank today might not be the best bank in six months.

Frequently Asked Questions

Will my money be safe if I move it to an online bank?

Yes. Online banks are FDIC-insured just like traditional banks. Your deposits are protected up to $250,000 per account type per bank. If you have more than $250,000, spread it across multiple banks or account types to stay fully insured. Online banks are regulated by the same federal agencies as brick-and-mortar banks.

How often do savings rates change?

Banks can change rates whenever they want, but most follow the Federal Reserve's moves. When the Fed changes rates, banks typically adjust within days or weeks. Some banks raise rates quickly to attract customers but cut them slowly when rates fall. Check rates every few months to see if you're still getting a competitive offer.

Is a CD better than a savings account if rates are similar?

CDs usually pay slightly more than savings accounts, but you can't touch the money without a penalty. If you won't need the money for one to five years, a CD might earn you an extra 0.25% to 0.75%. If you might need it sooner, a high-yield savings account is more flexible and still pays well.

Can I move money between banks without losing interest?

Yes. Interest accrues daily and is paid monthly or quarterly, depending on the bank. When you move money, you'll receive interest through the last day you held it at the old bank. The new bank starts paying interest the day your deposit arrives. You don't lose anything by switching.

What if my bank matches a higher rate I found elsewhere?

Some banks will match a competitor's rate if you ask. It's worth a call to your current bank, especially if you have other accounts there. But don't assume they'll match—many won't. If they do, get the offer in writing and confirm the rate is may provide for a specific period.