Where to find the highest APY rates today

The highest APY for a savings account varies by the day and by the bank offering it. As of now, online banks and credit unions typically offer rates between 4.5% and 5.35% APY on high-yield savings accounts, while traditional brick-and-mortar banks usually offer 0.01% to 0.5% APY. The difference matters: on $10,000, a 5% account earns $500 per year while a 0.5% account earns $50.

Online banks pay more because they have lower overhead costs—no physical branches, fewer staff. Credit unions sometimes match or beat online banks if you meet their membership requirements. Banks change their rates weekly or even daily based on what the Federal Reserve does and what competitors offer, so the "highest" rate today may not be the highest next month.

The catch is that these high rates are not permanent. When the Federal Reserve cuts interest rates (which it does during economic slowdowns), banks lower their APY within days or weeks. Rates that sit at 5% today might drop to 2% or lower within months if the economy shifts.

Key Takeaways

  • Online banks and credit unions currently offer the highest APY rates, typically between 4.5% and 5.35%, compared to traditional banks at 0.01% to 0.5%.
  • APY rates change frequently—sometimes weekly—so comparing rates across multiple banks before opening an account matters.
  • High rates today are tied to Federal Reserve policy and will drop if the Fed cuts rates, so locking in a rate now means nothing; you earn whatever the bank pays each month.
  • The bank's FDIC insurance (up to $250,000 per account) protects your money regardless of APY, so a slightly lower rate at an insured bank is safer than chasing the absolute highest rate at an uninsured institution.
  • Money market accounts and certificates of deposit (CDs) sometimes offer higher rates than savings accounts, but they restrict how often you can withdraw.

How to compare APY across banks

Start by checking the current rates on sites like Bankrate, DepositAccounts, or NerdWallet, which update rates multiple times per day. These sites let you filter by account type (savings, money market, CD) and sort by APY. Write down the top five rates and the banks offering them, then visit each bank's website to confirm the rate is still current—rates can change between when the comparison site updates and when you check.

Look at the fine print for each account. Some banks offer a promotional rate for the first three months, then drop to a lower rate. Others require a minimum balance (often $1,000 to $25,000) to earn the advertised APY. A few charge monthly fees that eat into your interest. Read the terms before you open the account.

Verify that the bank is FDIC-insured (for banks) or NCUA-insured (for credit unions). This protects your money up to $250,000 if the institution fails. You can check FDIC status on the FDIC's BankFind tool and NCUA status on the NCUA's credit union search tool.

Online banks versus credit unions versus traditional banks

Online banks (like Marcus, Ally, or Wealthfront) have no physical locations and pass the savings to you through higher APY. They typically offer 4.5% to 5.35% APY on savings accounts. The downside is you cannot deposit cash in person or speak to someone face-to-face. Most let you transfer money in and out via ACH, wire, or mobile deposit.

Credit unions are member-owned cooperatives that sometimes offer rates matching or beating online banks—5% or higher on savings accounts. To join, you usually need to live or work in a specific area, belong to an employer, or be part of an organization. Once you join, you may have access to better rates and lower fees than banks. Credit unions are NCUA-insured, so your money is protected the same way as at a bank.

Traditional banks (Chase, Bank of America, Wells Fargo) offer low APY—often 0.01% to 0.5%—because they rely on branch networks and have higher costs. They make up for low rates by offering convenience (thousands of ATMs, in-person service) and bundled products (checking, savings, loans in one place). If you need to deposit cash regularly or prefer face-to-face banking, the convenience may be worth the lower rate.

Money market accounts and CDs as alternatives

If you want a higher rate than a regular savings account, a money market account or certificate of deposit (CD) might pay more. Money market accounts often offer rates 0.25% to 0.5% higher than savings accounts at the same bank, but they limit how many withdrawals you can make per month (usually three to six). CDs lock your money away for a set term—three months, six months, one year, five years—and pay a fixed rate for that entire period. If you withdraw early, you pay a penalty (usually a few months' worth of interest).

CDs are useful if you know you will not need the money for a specific time. A one-year CD might pay 5.2% APY while a savings account at the same bank pays 4.8% APY. The extra 0.4% is your reward for agreeing not to touch the money. If rates drop after you buy the CD, you are locked in at the higher rate. If rates rise, you are stuck at the lower rate until the CD matures.

Money market accounts are a middle ground: they pay more than savings but let you withdraw whenever you want (within the monthly limit). They work well if you want slightly higher returns but need some access to your cash.

What happens to your APY when rates change

Your APY is not locked in. Banks can change the rate they pay on savings accounts at any time, and most do so within days of a Federal Reserve rate change. When the Fed raises rates, banks raise their savings APY to compete for deposits. When the Fed cuts rates, banks cut their savings APY to protect their profit margins.

This means a 5% account today could become a 3% account in six months if the Fed cuts rates. You do not have to do anything—the rate just changes in your account. You earn whatever the bank is currently paying, whether that is higher or lower than when you opened the account. The only way to lock in a rate is to open a CD, which fixes the APY for the entire term.

If you are holding cash in a savings account and rates start to fall, you have already earned the interest at the higher rate. Money you deposit later earns the new, lower rate. There is no penalty for staying in a savings account when rates drop; you simply earn less on new deposits going forward.

How much interest you actually earn

APY tells you the annual rate, but interest is usually paid monthly. Banks calculate your interest daily based on your balance, then deposit it into your account once a month. On a $10,000 balance at 5% APY, you earn roughly $41.67 per month (or about $500 per year), though the exact amount depends on how many days are in the month and how the bank calculates daily interest.

The interest you earn is taxable income. At the end of the year, the bank sends you a 1099-INT form showing how much interest you earned. You report this on your tax return. If you earned $500 in interest, you owe federal income tax on that $500 (the rate depends on your tax bracket). Some states also tax savings interest, though many do not.

If you move money between accounts or close an account mid-month, the bank may not pay the full month's interest. Read the account terms to see how the bank handles partial-month interest.

Red flags when shopping for high APY

Avoid any bank or account that is not FDIC-insured (for banks) or NCUA-insured (for credit unions). If the bank fails, uninsured deposits are lost. Some online investment platforms offer high rates on cash accounts but do not carry FDIC insurance—your money is at risk.

Be wary of promotional rates that expire. Some banks advertise 5.5% APY for the first three months, then drop to 2% after that. Read the fine print to see when the promotional rate ends and what the regular rate is. If the regular rate is low, the account is not worth opening just for the promotional bonus.

Do not open an account just because it has the highest rate on a comparison site. If the rate is significantly higher than competitors (more than 1% above the average), ask why. Sometimes it is because the bank is new and trying to attract deposits. Sometimes it is because the rate is temporary or comes with hidden fees. Stick with established banks and credit unions that have been around for years.

Frequently Asked Questions

Can I move my money between banks if rates drop?

Yes. You can open a new account at a bank with a higher rate and transfer your money there. There is no penalty for closing a savings account (unlike CDs). The transfer usually takes three to five business days via ACH. You will earn interest at the old bank until the money leaves and at the new bank starting the day it arrives.

What is the difference between APY and APR?

APY includes compound interest (interest earned on interest), while APR does not. For savings accounts, APY is the number that matters because it shows your true annual return. APR is used for loans and credit cards. A savings account at 5% APY earns more than one at 5% APR because of compounding.

Do I have to pay taxes on savings account interest?

Yes. Interest earned on savings accounts is taxable income at the federal level and in most states. The bank sends you a 1099-INT form at the end of the year showing how much you earned. You report this on your tax return. The amount you owe depends on your tax bracket.

Is my money safe in an online bank?

Yes, if the online bank is FDIC-insured. Your deposits are protected up to $250,000 per account, the same as at a traditional bank. Online banks are regulated by the same federal agencies as brick-and-mortar banks. The only risk is if the bank is not FDIC-insured, so always check before opening an account.

What happens to my APY if I do not withdraw the interest?

The interest stays in your account and earns interest itself the next month. This is called compounding. If you earn $50 in interest one month and do not withdraw it, that $50 earns interest the following month. Over time, compounding makes your money grow faster, especially at higher APY rates.