4% APR on a savings account is above average right now, but the real answer depends on when you opened it and what type of account it is

A 4% annual percentage rate (APR) on savings is solid in 2024, but "good" is relative. Banks and credit unions offer rates that change weekly based on what the Federal Reserve does with interest rates. Six months ago, 4% was excellent. In another six months, it might be ordinary. The first thing to check: is your account a high-yield savings account (HYSA), a money market account, or a regular savings account? The account type matters more than the number itself.

If you opened a regular savings account at a big national bank and it's earning 4%, that's genuinely good—most of those accounts pay 0.01% to 0.05%. If you opened a high-yield savings account at an online bank and it's earning 4%, that's average to slightly below average right now. Online banks and credit unions are currently offering rates between 4.25% and 5.35%, depending on the institution and the day you check.

Key Takeaways

  • A 4% rate is above average for traditional bank savings accounts but below average for high-yield savings accounts offered by online banks.
  • The rate you see today will not stay the same—banks adjust rates weekly or monthly as Federal Reserve policy changes.
  • You should compare your current rate to what other banks are offering right now, not to what they offered last year.
  • The difference between 4% and 5% on $10,000 is $100 per year, so shopping around for a higher rate is worth the time it takes.

How to tell if your bank is keeping up with the market

The fastest way to know if 4% is good is to check what other banks are offering today. Visit the websites of online banks like Marcus, Ally, American Express Personal Savings, or your local credit union. Write down the current rates they're advertising. If your bank is offering 4% and competitors are offering 4.5% or higher, your bank is lagging.

Banks don't all move at the same speed. Some raise rates quickly when the Fed signals a change is coming. Others wait weeks or months, hoping customers won't notice. If you've had the same account for more than a few months and the rate hasn't moved, check what's available elsewhere. You can move money to a new account without penalty—savings accounts have no early withdrawal fees.

What 4% actually earns you

The difference between rates sounds small until you do the math. On $10,000, a 4% rate earns you $400 per year. On the same $10,000, a 5% rate earns you $500 per year. That's $100 more for doing nothing except moving your money. On $50,000, the difference is $500 per year. On $100,000, it's $1,000 per year.

These numbers assume the rate stays constant all year, which it won't. Banks adjust rates based on Federal Reserve decisions, which happen roughly every six weeks. Your rate could go up or down during the year. But the principle holds: a higher rate, all else equal, means more money in your account at the end of the year.

Why your bank might be offering 4% instead of 5%

If you're at a traditional bank and seeing 4%, that's likely because the bank is trying to keep rates lower than competitors to protect its profit margin. Traditional banks make money by lending out deposits at higher rates than they pay you. The smaller the gap, the less profit they make. Online banks and credit unions have lower overhead—no physical branches, fewer employees—so they can afford to pay you more and still make money.

Some people stay with lower-rate banks because they value the branch network, customer service, or the ability to deposit cash in person. That's a valid choice, but you're paying for it in lost interest. If you don't need those services, moving to an online bank or credit union with a higher rate is straightforward and takes about 10 minutes.

When 4% might be the right choice anyway

Even if a competitor is offering 5%, staying at 4% makes sense in a few situations. If your bank offers a checking account with no fees and good customer service, and you're already using it, the hassle of moving might not be worth $100 per year. If you have a large balance and your bank offers tiered rates—meaning you earn more on higher balances—the effective rate might be higher than advertised. If you're using the savings account as a holding tank for money you'll move to an investment account soon, locking in a rate for a few months is less important than having the money accessible.

But if you're keeping the money in savings for a year or more, the rate matters. A 1% difference on $50,000 over five years is $2,500. That's not trivial.

How to move your money if you find a better rate

Opening a new account at a bank with a higher rate takes about 10 minutes online. You'll need your Social Security number, a government ID, and your current address. The new bank will ask if you want to link your old account for transfers. Say yes. You can then move money from your old account to the new one using an ACH transfer, which is free and takes one to three business days.

You don't have to close your old account right away. Move the money first, wait a few days to make sure the transfer went through, then close the old account if you want. Some people keep both accounts open—one for the rate, one for the convenience of a local branch. That's fine, but it means you're splitting your balance and earning less total interest.

What to watch for when comparing rates

When you see a bank advertising a rate, check the fine print. Some banks offer a promotional rate for the first few months, then drop it. Others offer a high rate only on balances above a certain amount—say, 5% on the first $25,000 and 0.5% on anything above that. Read the terms before you move your money.

Also check whether the bank is FDIC-insured (if it's a bank) or NCUA-insured (if it's a credit union). This insurance protects your money up to $250,000 if the institution fails. Nearly all legitimate banks and credit unions carry this insurance, but it's worth confirming.

Frequently Asked Questions

Will my 4% rate stay at 4% forever?

No. Banks adjust rates based on Federal Reserve policy, usually weekly or monthly. Your rate could go up or down. If the Fed raises rates, your bank will likely raise yours too—but maybe not as quickly as competitors. If the Fed cuts rates, your bank will cut yours.

Is it worth moving my money for a 0.5% difference?

On $10,000, a 0.5% difference is $50 per year. On $50,000, it's $250 per year. If moving takes 10 minutes and the money will sit there for a year or more, yes, it's worth it. If you're moving the money in a few weeks anyway, probably not.

Can I lose money if I move to a different bank?

No. Savings accounts are FDIC or NCUA insured up to $250,000. Moving your money between insured institutions carries no risk of loss. The only cost is your time.

What if my bank drops the rate after I move my money there?

You can move again. There's no penalty for moving money between savings accounts. If a bank drops its rate below competitors, you can open a new account elsewhere and transfer your balance. You're not locked in.

Does a higher APR mean the bank is riskier?

Not necessarily. Online banks and credit unions offer higher rates because they have lower costs, not because they're riskier. As long as the institution is FDIC or NCUA insured, your money is equally safe at 4% or 5%.