The highest APY changes weekly, so there is no permanent answer

The bank with the highest APY today will not be the same bank next month. Interest rates move constantly based on what the Federal Reserve does and what banks decide to offer. Right now, online banks and credit unions typically offer higher APY than brick-and-mortar banks, but the specific leader shifts. A savings account at one bank might pay 4.5% this week and 4.2% the next.

The only way to know which bank has the highest rate on the day you open an account is to check multiple banks yourself. Comparison sites like Bankrate, DepositAccounts, and NerdWallet update daily, but even those lag by a few hours. If you are moving money today, call or visit the bank's website directly to confirm the rate they are quoting.

Key Takeaways

  • Online banks almost always pay more APY than traditional banks because they have lower overhead costs, but the specific highest rate changes weekly.
  • Credit unions sometimes match or beat online banks, especially if you are a member, so check both before deciding.
  • The difference between the highest and second-highest rate is often less than 0.5%, so opening an account at a bank you already trust may cost you less in switching hassle than it saves in interest.
  • APY rates are may provide only for the term stated on the account details—banks can lower rates after that period ends.

Why online banks pay more than traditional banks

Online banks have no physical branches, no tellers, and no building leases. That cuts their costs by millions per year. They pass some of that savings to customers in the form of higher interest rates. A traditional bank with 500 branches nationwide cannot match an online-only bank's rate because the branch network costs money.

This does not mean online banks are riskier. Most are insured by the Federal Deposit Insurance Corporation (FDIC), the same agency that insures brick-and-mortar banks. Your money is protected up to $250,000 per account type per bank, whether the bank has a building or not.

Where to find current rates and compare them

Bankrate, DepositAccounts, and NerdWallet publish updated rates multiple times per day. They list savings accounts, money market accounts, and certificates of deposit (CDs) separately because rates differ by product. Use the filter to narrow by account type, then sort by APY from highest to lowest.

These sites do not charge you to use them and do not earn money when you open an account through them—they make money from advertising. That means the rates they show are real, but the list is not exhaustive. Some smaller regional banks and credit unions do not appear on these sites. If you bank locally, call your bank directly to ask what they are currently paying.

When you find a rate you like, visit the bank's website to confirm it is still current before you transfer money. Rates posted on comparison sites can be a few hours old.

The difference between savings accounts, money market accounts, and CDs

A high-yield savings account lets you withdraw money anytime without penalty. The APY is usually the highest for accounts with no withdrawal limits, but it can change at any time. Banks often lower rates after a promotional period ends.

A money market account works similarly but usually requires a higher opening balance—often $2,500 to $10,000. In exchange, the APY is sometimes slightly higher. You can still withdraw money, but the account may limit how many withdrawals you make per month.

A certificate of deposit (CD) locks your money away for a set time—three months, six months, one year, five years. In exchange, the bank pays a higher APY because it knows your money will stay there. If you withdraw before the term ends, you pay a penalty that eats into your interest. CDs currently pay more APY than savings accounts at most banks, but you lose access to your cash.

How to lock in a rate before it drops

If you find a rate you like, open the account immediately. Banks can lower rates without notice, and they often do when the Federal Reserve cuts rates. There is no penalty for opening an account and moving money in—you are not locked into anything except a CD.

For savings accounts and money market accounts, the rate you see when you open the account is not may provide forever. Read the account agreement to see whether the bank can change your rate and how much notice they must give. Most banks can lower rates after 30 days notice, though some give longer notice periods.

If you want a may provide rate, open a CD. The rate is locked for the entire term. When the CD matures, you can renew it at whatever rate the bank is offering then, or move the money elsewhere.

What happens when the Federal Reserve changes rates

The Federal Reserve does not set the interest rate banks pay you directly. Instead, it sets the federal funds rate, which is the rate banks charge each other for overnight loans. When the Fed raises that rate, banks usually raise the APY they pay on savings accounts and CDs within days or weeks. When the Fed cuts rates, banks usually cut what they pay you within days or weeks as well.

This means the highest APY you see today may not be the highest you see in three months. If the Fed is expected to cut rates, locking in a CD now protects you from lower rates later. If the Fed is expected to raise rates, a savings account lets you benefit from higher rates without being locked in.

Regional banks and credit unions sometimes beat the national leaders

The banks with the absolute highest APY are usually online banks like Marcus, Ally, or American Express Personal Savings. But some regional banks and credit unions pay just as much or more. Credit unions are member-owned, not shareholder-owned, so they sometimes return more money to members through higher rates.

If you are a member of a credit union, ask what they are paying on savings accounts and CDs. If you bank with a regional bank, call and ask. You may find a rate that matches the online leaders without having to switch banks entirely. The convenience of staying where you are might be worth a 0.1% or 0.2% difference in APY.

Frequently Asked Questions

Can a bank lower my APY after I open an account?

Yes. Banks can lower the APY on savings accounts and money market accounts at any time, usually with 30 days notice. The rate you see when you open the account is not locked in. CDs are different—the rate is may provide for the entire term, and the bank cannot lower it before the CD matures.

Is my money safe in an online bank?

Yes, as long as the bank is FDIC-insured. Check the bank's website or call to confirm. Your deposits are insured up to $250,000 per account type, the same as at a traditional bank. The FDIC does not care whether the bank has branches.

Should I move my money to chase the highest rate?

Only if the difference is meaningful to you. If the highest rate is 4.5% and your current bank pays 4.0%, you earn an extra $50 per year on $10,000. If switching costs you time or hassle, it may not be worth it. But if you are opening a new account anyway, there is no reason not to choose the bank paying the most.

What is the difference between APY and APR?

APY includes compound interest—interest earned on your interest. APR does not. For savings accounts, you want APY because it shows the real return. APR is used for loans and credit cards, where it shows what you pay.

Do I need a minimum balance to get the highest APY?

Most high-yield savings accounts have no minimum balance requirement. Some money market accounts require $2,500 or more to open. CDs usually have minimums of $500 to $2,500. Check the bank's website for the specific account you are interested in.