Current savings rates vary by bank and account type, from under 0.01% at some big banks to 5.35% or higher at online banks

The rate your savings account earns depends almost entirely on where you keep the money. A Chase or Bank of America savings account might pay 0.01% annual percentage yield (APY), meaning $10,000 earns about $1 per year. The same $10,000 at an online bank like Marcus, Ally, or American Express Personal Savings could earn $500 to $535 per year at current rates. The difference is real money, and it compounds.

Rates change constantly—sometimes weekly—because they follow the Federal Reserve's benchmark rate, which the Fed adjusts based on inflation and economic conditions. When the Fed raises its rate, banks eventually raise savings rates. When the Fed cuts, rates fall. You won't see the change happen instantly at every bank, but within weeks most will move.

Right now, high-yield savings accounts (HYSAs) at online banks are paying between 4.75% and 5.35% APY. Traditional brick-and-mortar banks are paying far less—often 0.01% to 0.05%. Credit unions sometimes fall in the middle, around 0.50% to 2.00%, though a few offer competitive rates. Money market accounts at online banks are also paying in the 4.75% to 5.35% range, sometimes slightly higher.

Key Takeaways

  • Online banks currently pay 4.75% to 5.35% APY on savings accounts, while traditional banks pay 0.01% to 0.05%—a difference of hundreds of dollars per year on the same balance.
  • Rates move when the Federal Reserve changes its benchmark rate, and most banks adjust within weeks, so your rate may change several times per year.
  • Money market accounts and high-yield savings accounts offer similar rates right now, but money market accounts may require higher minimum balances or limit withdrawals.
  • All deposits at FDIC-insured banks are protected up to $250,000 per account type per bank, so a higher rate does not mean higher risk if you stay within that limit.

Why rates differ so much between banks

Online banks pay more because they have lower overhead. They don't maintain physical branches, employ tellers, or pay for real estate. That savings gets passed to customers as higher rates. They also compete aggressively for deposits because they can't rely on foot traffic or existing customer relationships.

Traditional banks pay less because they make money from loans, not from attracting deposits. They know many customers won't move their money even for a much higher rate elsewhere—switching banks feels like work. Online banks have no choice but to offer the best rate they can, because rate is their only selling point.

Credit unions fall somewhere in between. Some are very competitive; others are not. It depends on the union's size, membership base, and strategy. A few credit unions offer rates competitive with online banks, but you have to search for them and you usually have to be a member to open an account.

How to find the current rate at a specific bank

Go directly to the bank's website and look for the savings account product page. The rate will be listed as "APY" or "Annual Percentage Yield." That is the rate you will actually earn, already accounting for compounding. Do not trust a rate you see on a comparison site if it is more than a few days old—rates move too fast.

Call the bank if the website is unclear. Customer service can tell you the exact rate for the account you are considering and whether there are any conditions—like a minimum balance or a promotional period. Some banks offer a higher "promotional rate" for the first few months, then drop to a lower "standard rate." Always ask how long the promotional rate lasts.

Check whether the bank is FDIC-insured. Every bank on the FDIC's website is safe; your deposits are protected up to $250,000 per account type. Online banks are FDIC-insured just like traditional banks. Credit unions are insured by the NCUA (National Credit Union Administration) up to the same $250,000 limit.

What happens when the Federal Reserve changes rates

When the Fed raises its benchmark rate, banks have more incentive to pay higher savings rates because they can charge more on loans. When the Fed cuts, banks lower savings rates because loan rates fall and they need less deposit money. The lag between a Fed move and a bank's response is usually one to four weeks, though some banks move faster than others.

Your rate is not locked in. It can go up or down without notice. If you have money in a savings account earning 5.35% and the Fed cuts rates, your bank will eventually lower your rate too. This is why it matters to keep an eye on rates and move money if a better option appears—you are not locked into any bank.

Some banks raise rates quickly when the Fed moves up, but lower them slowly when the Fed cuts. This is normal and legal. Shop around after a Fed cut to see if another bank is still paying more. After a Fed increase, your current bank may raise your rate within days, or it may take weeks.

High-yield savings accounts versus money market accounts

Both currently pay similar rates—usually 4.75% to 5.35% APY. The main difference is how you access the money. A high-yield savings account works like a regular savings account: you can withdraw money whenever you want, though federal rules once limited withdrawals to six per month (that rule is no longer enforced, but some banks still have internal limits). A money market account is a hybrid between a savings account and a checking account—it may come with a debit card or checks, but it usually has a higher minimum balance requirement and may limit the number of withdrawals.

For most people, a high-yield savings account is simpler. You get the high rate without the complexity of a money market account. Money market accounts make sense if you want check-writing ability or if you have a large balance and the bank offers a slightly higher rate for money market deposits.

Promotional rates and what happens after they end

Some online banks offer a promotional rate for new customers—for example, 5.50% for the first three months, then 4.75% after that. Read the fine print carefully. The promotional rate is real, but it is temporary. After the promotional period ends, your rate drops to the standard rate, which is lower. You are not locked in, so you can move the money to another bank if the standard rate is not competitive.

Promotional rates are a way for banks to attract new customers. They are not a scam, but they are not a permanent deal either. If you are comparing banks, compare the standard rate, not the promotional rate. The promotional rate is a bonus, not the real offer.

How to decide where to keep your savings

Start by deciding how much money you need to keep liquid—money you might need within the next year or two. That money should go in a savings account, not in stocks or bonds. Then find the bank paying the highest rate on that amount. If you have $50,000 in savings, the difference between 0.01% and 5.00% is about $2,500 per year. That is worth ten minutes of research.

Check that the bank is FDIC-insured and that your balance is under $250,000 (or split it across multiple banks if it is higher). Then open an account. Most online banks let you open an account in 10 minutes from your phone. You can fund it by transferring money from your current bank—that usually takes one to three business days.

Do not worry about "missing out" on a slightly higher rate at a different bank. Rates move constantly. If you find a bank paying 5.00% and another paying 5.35%, the difference on $10,000 is $35 per year. It is not worth switching every month. Pick a bank with a solid rate and a good reputation, open an account, and check back once or twice a year.

Frequently Asked Questions

Will my savings account rate go up if the Fed raises rates?

Probably, but not immediately. When the Fed raises its benchmark rate, banks usually raise savings rates within one to four weeks. Online banks often move faster than traditional banks. Your rate is not may provide to go up—the bank decides—but most do raise rates when the Fed moves up.

Can I lose money in a savings account?

No. Your balance is protected by FDIC insurance up to $250,000 per account type per bank. The rate you earn might go down, but your principal is safe. The only way to lose money is if you withdraw it yourself.

What is the difference between APY and APR?

APY (Annual Percentage Yield) includes compounding—the interest you earn on your interest. APR (Annual Percentage Rate) does not. For savings accounts, always look at APY. It is the real number that tells you how much you will earn.

Do I have to pay taxes on savings account interest?

Yes. Interest earned on a savings account is taxable income. Your bank will send you a 1099-INT form at the end of the year if you earned $10 or more in interest. You report it on your tax return. This is true regardless of which bank you use.

Can I move my money to a different bank if rates drop?

Yes, anytime. There is no penalty for moving money out of a savings account. You can transfer it to another bank in one to three business days. Some banks offer slightly higher rates to keep customers, so it is worth asking your current bank to match a competitor's rate before you switch.