Current savings account rates vary by bank and account type, ranging from near zero at large national banks to 4.5% or higher at online banks and credit unions
The rate you get depends on where you bank. A major national bank like Chase or Bank of America typically offers 0.01% to 0.05% on a regular savings account. An online bank like Marcus, Ally, or Wealthfront may offer 4.25% to 4.75% on the same type of account. Credit unions often fall somewhere between, usually 1% to 3%, though some offer higher rates to members who meet specific conditions.
These rates change frequently—sometimes weekly. The Federal Reserve sets a benchmark rate, and banks adjust their savings rates in response, but they do not all move at the same time or by the same amount. A bank that offered 4.5% last month might offer 4.25% this month. Checking the current rate on a bank's website before you open an account is essential, because marketing materials and comparison sites can lag behind actual rates.
The type of account also matters. A regular savings account, a money market account, and a certificate of deposit (CD) all earn different rates at the same bank. CDs typically pay more than savings accounts because you agree to leave the money untouched for a set period—three months, six months, one year, or longer. Money market accounts usually fall between the two.
Key Takeaways
- Online banks and credit unions currently offer significantly higher rates than national chain banks, often 4% or more on savings accounts.
- Rates change frequently and vary by institution, so you should check the current rate directly on the bank's website before opening an account.
- Certificates of deposit pay higher rates than savings accounts because your money is locked away for a fixed term.
- The Federal Reserve's benchmark rate influences all savings rates, but banks adjust at different times and by different amounts.
Why rates differ between banks
Banks set their own rates based on how much they need to attract deposits. An online bank with low overhead costs can afford to pay more interest because it spends less on branches and staff. A national bank with thousands of physical locations has higher costs and often pays less, betting that customers will stay for convenience rather than rate.
Credit unions are member-owned, not shareholder-owned, so they can return profits to members through higher rates. However, you must be a member to open an account, which usually means living or working in a specific area, belonging to a particular employer, or meeting other membership criteria.
Banks also adjust rates based on how much deposit money they currently have. If a bank has plenty of deposits, it may lower rates because it does not need to attract more. If deposits are low, it may raise rates to bring in more money. This is why the same bank might offer different rates at different times of year.
How to find the current rate for your situation
Start by visiting the website of any bank you are considering. Look for the savings account or money market account page and find the annual percentage yield (APY) listed there. That number is the rate you will actually earn, including the effect of compounding. Do not rely on a comparison website alone—rates change too quickly, and sites do not always update in real time.
If you are comparing CDs, note the term length. A one-year CD at Bank A might pay 4.8%, while a six-month CD at the same bank pays 4.2%. Longer terms usually pay more, but not always. Check what happens when the CD matures—some banks automatically renew at a lower rate unless you move the money.
For credit unions, you will need to check membership requirements first. The CO-OP Network and Shared Branch networks let credit union members access thousands of ATMs and branches nationwide, so you do not need to live near a specific branch. Search "credit union near me" or visit CO-OP's website to find one you can join.
The relationship between Federal Reserve rates and savings rates
When the Federal Reserve raises or lowers its benchmark rate, savings rates eventually follow, but the timing and size of the change vary. The Fed does not set savings rates directly—it sets the rate that banks charge each other for overnight loans. Banks use that as a reference point when deciding what to pay depositors.
After the Fed raises its rate, online banks typically raise savings rates within days or weeks. National banks often move more slowly or by smaller amounts. After the Fed lowers its rate, the pattern reverses: online banks drop rates quickly, while national banks may hold rates steady longer, hoping customers do not notice.
This lag means the best time to open a savings account is often right after the Fed raises rates, before banks have fully adjusted. Conversely, if the Fed is expected to cut rates soon, locking in a CD at the current rate may protect you from lower rates later.
Comparing savings accounts, money market accounts, and CDs
| Account Type | Typical Current Rate | Access to Money | Best For |
|---|---|---|---|
| Savings Account | 0.01% to 4.75% | Withdraw anytime, usually 6 withdrawals per month limit | Emergency fund, short-term goals |
| Money Market Account | 0.05% to 4.85% | Withdraw anytime, same 6-withdrawal limit | Larger balances, slightly higher rates than savings |
| Certificate of Deposit (CD) | 4.5% to 5.5% (varies by term) | Locked for set term; early withdrawal costs a penalty | Money you will not need for months or years |
Money market accounts and savings accounts work similarly—both let you withdraw money whenever you need it, though federal rules once limited withdrawals to six per month (that rule is no longer enforced, but some banks still impose limits). The main difference is that money market accounts often require a higher opening balance and pay slightly more interest in return.
CDs lock your money away for a fixed period. If you withdraw before the term ends, the bank charges a penalty, usually equal to a few months of interest. For example, a one-year CD with a three-month penalty means you lose three months of earnings if you cash out early. Read the penalty terms before you open a CD, because they vary widely.
What happens to your rate over time
Once you open a savings account, your rate is not locked in. Banks can lower rates at any time, and they often do. You might open an account earning 4.5% and find it has dropped to 3.8% six months later. The bank will notify you of the change, usually by email or mail, but you have to act—moving your money to a higher-paying account is your responsibility.
With a CD, your rate is locked for the entire term. If you open a one-year CD at 5.0%, you will earn 5.0% for the full year, even if rates drop to 2.0%. That is the trade-off for giving up access to your money. When the CD matures, the bank will offer you a new rate, which may be higher or lower than what you earned before.
Some banks offer rate-matching guarantees or loyalty bonuses for keeping money in an account for a certain period, but these are rare and come with conditions. Read the fine print before opening an account.
Frequently Asked Questions
Is 4% or higher on a savings account real, or is it a scam?
It is real. Online banks like Marcus, Ally, and Wealthfront genuinely offer rates in the 4% to 4.75% range on regular savings accounts. These banks have lower costs than national chains and can afford to pay more. You can verify the rate on their website and confirm it is FDIC-insured up to $250,000.
Why does my bank pay almost nothing on savings?
Large national banks pay low rates because they do not need to compete for deposits—customers stay for convenience and brand recognition. They also have higher costs and may prioritize lending profits over deposit rates. Switching to an online bank or credit union is the fastest way to earn more on the same money.
Should I open a CD or keep money in a savings account?
Use a savings account for money you might need within a few months. Use a CD for money you will not touch for at least six months to a year. CDs pay more, but you lose access and face a penalty for early withdrawal. If rates are expected to fall, locking in a CD now protects you; if rates are expected to rise, a savings account keeps your options open.
Do I need to worry about my savings account rate changing?
Yes, rates can drop without warning. Check your account rate every few months and compare it to what new customers are being offered. If your rate has fallen significantly behind, moving your money to a higher-paying account takes a few days and costs nothing.
What is the difference between APY and interest rate?
The interest rate is the percentage the bank pays on your balance. APY is the annual percentage yield, which includes the effect of compounding—earning interest on your interest. APY is always equal to or higher than the stated rate, so always compare APY numbers when choosing between accounts.