Which banks pay the most on savings accounts today
The banks paying the highest rates on savings accounts change month to month, but right now online banks consistently beat traditional brick-and-mortar banks by a significant margin. As of this writing, online banks like Marcus, Ally, and American Express Personal Savings are offering rates between 4.5% and 5.35% APY on standard savings accounts, while Chase, Bank of America, and Wells Fargo typically offer 0.01% to 0.05% APY on the same type of account.
The gap exists because online banks have lower overhead costs—no physical branches, fewer staff—and pass those savings to depositors. Traditional banks maintain branch networks and charge for services, which means they can afford to pay less on deposits. Your money is equally safe at either type; both are insured by the FDIC up to $250,000 per account holder per bank.
Rate changes happen frequently. A bank offering 5.35% today might drop to 4.85% in three months if the Federal Reserve cuts rates, or rise if the Fed holds steady. You should check current rates directly on each bank's website before moving money, because rate comparison sites sometimes lag by a day or two.
Key Takeaways
- Online banks currently pay 4.5% to 5.35% APY on savings accounts, while traditional banks pay 0.01% to 0.05% APY on the same accounts.
- Rates change monthly based on Federal Reserve policy, so the highest-paying bank today may not be the highest-paying bank next month.
- All deposits are FDIC-insured up to $250,000 per account holder per bank, regardless of whether you bank online or in person.
- You should verify current rates directly on each bank's website rather than relying on comparison sites, which may show rates that are one or two days old.
- Moving money between banks takes one to three business days via ACH transfer, so switching to a higher rate is not instantaneous but is straightforward.
How to compare rates across different account types
Savings accounts, money market accounts, and certificates of deposit (CDs) all earn interest, but at different rates and with different rules about when you can withdraw. A standard savings account lets you withdraw anytime without penalty. A money market account is similar but usually requires a higher opening deposit and may limit how many withdrawals you can make per month. A CD locks your money for a set term—three months, six months, one year, five years—and pays a higher rate in exchange for that commitment.
Right now, online banks pay roughly the same rate on savings and money market accounts—the difference is usually less than 0.1%—but CDs pay more. A one-year CD might pay 5.5% while a savings account pays 5.0%, and a five-year CD might pay 5.75%. The longer you lock the money away, the higher the rate, because the bank knows it can lend that money out for longer.
When comparing, look at the APY, not the interest rate. APY accounts for how often interest compounds (daily, monthly, quarterly), so it shows you the true annual return. Two banks might quote different interest rates but end up with the same APY because one compounds more frequently.
Online banks versus credit unions versus traditional banks
Online banks pay the highest rates because they have no branch costs. Credit unions sometimes pay competitive rates—typically 3% to 4.5% on savings—but membership requirements vary. Some credit unions are open to anyone in a certain geographic area; others require you to work for a specific employer or belong to a specific organization. You can search for credit unions near you through CO-OP, which operates a shared branch network, or through Alliant Credit Union's locator.
Traditional banks (Chase, Bank of America, Wells Fargo, Citibank) pay the lowest rates on savings accounts because they rely on branch networks and paid advertising. They make money by lending deposits out at higher rates, so they do not need to pay depositors much to attract money. Their advantage is convenience—you can walk into a branch and speak to a person—and they often offer bundled services like checking accounts, credit cards, and mortgages under one roof.
If you need to deposit cash frequently or prefer in-person service, a traditional bank or credit union may be worth the lower rate. If you rarely deposit cash and are comfortable with online banking, an online bank will earn you significantly more interest over time. A $10,000 deposit earning 5% at an online bank versus 0.05% at a traditional bank generates $500 per year versus $5 per year—a $495 difference on a single account.
What happens when the Federal Reserve changes rates
Banks set their savings rates based partly on the Federal Reserve's benchmark rate, which is the interest rate at which banks lend to each other overnight. When the Fed raises its rate, banks have more incentive to pay depositors more, because they can earn more by lending money out. When the Fed cuts its rate, banks lower deposit rates because lending becomes less profitable.
The relationship is not one-to-one. If the Fed raises its rate by 0.5%, your savings rate might rise by 0.3% or 0.7% depending on the bank and how competitive the market is. Online banks tend to raise rates faster when the Fed moves up, because they compete directly on rate. Traditional banks raise rates more slowly because they have other ways to attract deposits.
The Fed has held its rate steady since mid-2023, which is why savings rates have stabilized in the 4.5% to 5.35% range. If the Fed cuts rates in the coming months, expect savings rates to fall within weeks. If the Fed raises rates again, savings rates will likely rise as well, though the timing and size of the increase are unpredictable.
How to move money to a higher-paying bank
Opening a new savings account at a higher-paying bank takes 10 to 15 minutes online. You will need your Social Security number, a government ID, your current address, and your employment information. The bank will verify your identity electronically and usually approve you the same day.
Transferring money from your old bank to the new one takes one to three business days via ACH transfer, which is free. Log into your new bank's website, find the "transfer" or "link account" section, and enter your old bank's routing number and your account number. The new bank will initiate the transfer, and the money will appear in your new account within three business days. You do not need to call your old bank or visit a branch.
Once the money arrives, you can close the old savings account if you want. Some people keep multiple savings accounts at different banks to spread their deposits across the FDIC insurance limit—for example, $250,000 at Bank A and $250,000 at Bank B means $500,000 total is insured. This is useful if you have a large amount saved and want full insurance coverage.
Fees and minimum balances to watch for
Most online banks charge no monthly maintenance fee and have no minimum balance requirement. A few still do: some require $500 or $1,000 to open, and some charge $5 to $10 per month if your balance falls below a threshold. Read the fee schedule on the bank's website before opening an account.
Inactivity fees are rare but do exist at some banks. If you do not make a deposit or withdrawal for 12 months, the bank may charge a small fee. This is uncommon at major online banks but worth checking if you plan to open an account and leave it untouched for a long time.
Overdraft fees apply to checking accounts, not savings accounts, but are worth knowing about if you link the two. If you overdraw your checking account and the bank transfers money from your linked savings account to cover it, some banks charge $10 to $35 per transfer. You can usually disable this feature in your account settings to prevent accidental transfers.
Frequently Asked Questions
Can I move my money between banks without losing interest?
Yes. Interest accrues daily, so you earn interest right up until the moment you initiate a transfer. The money takes one to three business days to arrive at the new bank, and you start earning interest at the new rate as soon as it lands. You do not lose any interest in the transfer process itself.
What if a bank lowers its rate after I open an account?
Banks can lower rates anytime without notice. Your existing balance will earn the new, lower rate going forward. This is why it makes sense to move money to a higher-paying bank if your current bank drops its rate significantly. There is no penalty for closing a savings account.
Is my money safe at an online bank I have never heard of?
If the bank is FDIC-insured, your deposits up to $250,000 are protected by the federal government, the same as at Chase or Bank of America. You can verify FDIC insurance on the bank's website or by searching the FDIC's bank locator. Online banks are regulated the same way as traditional banks.
Do I have to keep a certain amount in savings to earn the advertised rate?
No. Most online banks pay the full advertised APY on all balances, from $1 to $250,000. A few banks pay a lower rate on balances below a certain threshold—for example, 4.5% on balances under $25,000 and 5.35% on balances above it. Check the bank's rate sheet to see if tiered rates apply.
How often does interest get added to my account?
Interest compounds daily at most online banks, meaning it is calculated every day and added to your balance monthly or quarterly. Daily compounding means you earn interest on your interest, which adds up over time. The APY already accounts for this compounding, so you do not need to do any math yourself.