The best interest rates right now are at online banks and credit unions, not at the brick-and-mortar banks most people use

Your bank is probably paying you almost nothing on your savings account. A typical big bank offers 0.01% annual interest on a regular savings account, which means $10,000 sits there earning $1 per year. Online banks and credit unions currently offer rates between 4% and 5.35% on high-yield savings accounts, meaning that same $10,000 earns $400 to $535 per year.

The reason is simple: online banks have lower overhead costs than physical branches, so they pass some of that savings to depositors. Credit unions are member-owned and often prioritize member returns over profit. Both are insured the same way your current bank is — up to $250,000 per account through the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration).

The catch is that rates change constantly, sometimes weekly. What offers 5% today may offer 4.5% next month. The banks and credit unions listed below represent where rates tend to cluster, but you should check current rates directly before moving money.

Key Takeaways

  • Online banks currently pay 4% to 5.35% annual interest on high-yield savings accounts, while traditional banks pay closer to 0.01%.
  • Credit unions often match or beat online bank rates and may offer better terms if you become a member.
  • Money market accounts and certificates of deposit (CDs) can pay higher rates than savings accounts, but lock your money away for a set period.
  • Your deposits are protected up to $250,000 whether you bank online or in person, as long as the institution is FDIC or NCUA insured.
  • Rates shift frequently, so comparing current offers across multiple banks takes 15 minutes but can mean hundreds of dollars per year in difference.

Online banks with the highest savings rates

Online banks dominate the high-yield savings market because they operate without physical locations. Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank have historically offered rates at or near the top of the market. As of late 2024, these banks typically offered rates between 4.2% and 5.35%, though exact rates vary by the day and by account type.

To open an account, you visit the bank's website, provide your Social Security number, verify your identity, and link a checking account to transfer money in. The whole process takes 10 to 15 minutes. You can deposit money immediately, and interest begins accruing right away. Withdrawals take one to three business days to reach your linked account.

The main trade-off is convenience: you cannot walk into a branch or call a human at most online banks. Customer service is phone or chat only. If you need to deposit cash, you have to transfer it from another bank account or use a mobile check deposit feature if the bank offers it.

Credit unions and their member rates

Credit unions are nonprofit organizations owned by their members. Because they do not answer to shareholders, they often return earnings to members through higher interest rates and lower fees. Many credit unions offer high-yield savings accounts that match or beat online bank rates.

To join a credit union, you must meet membership criteria — usually based on where you work, where you live, or a group you belong to. Some credit unions have open membership. Once you join, you own a small share of the organization and can vote on leadership. Joining typically costs nothing or a small one-time fee ($5 to $25).

Credit unions are insured through the NCUA, which works the same way as FDIC insurance — your money is protected up to $250,000. Many credit unions also have physical branches and ATM networks, so you get both the higher rates and the ability to deposit cash in person. The downside is that credit union rates vary widely depending on the union, so you have to check your specific credit union's current offer.

Money market accounts versus high-yield savings

A money market account is a hybrid between a savings account and a checking account. It typically pays interest similar to a high-yield savings account but also lets you write checks or use a debit card. The trade-off is that money market accounts often require a higher opening balance — sometimes $2,500 to $10,000 — and may limit the number of withdrawals per month.

If you need to access your money frequently, a high-yield savings account is usually better. If you want to park money for several months and do not need to touch it, a money market account may offer a slightly higher rate and still give you the option to withdraw if an emergency comes up.

Both money market accounts and high-yield savings accounts are liquid, meaning you can withdraw your money without penalty. That makes them different from CDs, which lock your money away.

Certificates of deposit for locked-in rates

A certificate of deposit (CD) is an agreement where you give a bank money for a set period — typically three months to five years — and the bank pays you a fixed interest rate. In exchange, you cannot withdraw the money without paying a penalty, usually a few months of interest.

CD rates are often higher than savings account rates because the bank knows it will have your money for a may provide period. A one-year CD might pay 4.8% while a high-yield savings account pays 4.5%. A five-year CD might pay 5.2%.

CDs make sense if you know you will not need the money for a specific amount of time. If you have $5,000 you will not touch for two years, a two-year CD locks in a rate that will not drop. If interest rates fall, you still earn the rate you locked in. If rates rise, you are stuck with your original rate until the CD matures.

You can open CDs at online banks, credit unions, and traditional banks. Online banks typically offer the highest CD rates. The FDIC and NCUA insure CDs the same way they insure savings accounts.

How to compare rates across banks

Interest rates change constantly, so the best rate today may not be the best rate next week. To find current rates, visit the websites of online banks directly — Marcus, Ally, American Express, and Discover all publish their rates on their home pages. For credit unions, search for credit unions in your area or check whether you are a member of one already.

Bankrate.com and DepositAccounts.com track rates across hundreds of banks and update them daily. These sites let you filter by account type, minimum balance, and FDIC insurance status. They do not let you open an account directly, but they show you where to go and what the current offer is.

When comparing, pay attention to the annual percentage yield (APY), not just the interest rate. APY includes the effect of compounding — how often interest is added to your account. A bank that compounds interest daily will pay slightly more than one that compounds monthly, even if the stated rate is the same.

Also check the minimum opening balance. Some banks require $0 to open; others require $500 or $1,000. If you have a small amount to deposit, this matters.

Moving money from your current bank

If you decide to move your savings to a higher-rate account, the process is straightforward. Open an account at the new bank, then transfer money from your old bank to the new one. Most banks let you initiate the transfer from either end — you can tell the new bank to pull money from your old account, or you can tell your old bank to send money to the new one.

Transfers between banks take one to three business days. During that time, your money is in transit and still earning interest at your old bank. Once it arrives at the new bank, it starts earning the new rate immediately.

You do not have to close your old account right away. Many people keep a small amount in their old bank for convenience and move the bulk of their savings to the higher-rate account. If you do decide to close the old account, make sure you have moved everything out and that no automatic payments are still tied to it.

What to watch out for

Rates are may provide to fall at some point. When the Federal Reserve cuts interest rates — which it does during economic slowdowns — bank rates fall too. A 5% account might drop to 3% within months. This is normal and affects all banks equally. There is no way to predict when it will happen, so do not wait for rates to rise further before moving your money.

Some banks advertise promotional rates that are only available for a limited time or only on the first deposit. Read the fine print. A bank might offer 5.5% for the first three months, then drop to 4% after that. If the promotional period is short, the higher rate may not be worth the hassle of moving money.

Verify that the bank or credit union is FDIC or NCUA insured before you deposit money. You can check this on the FDIC and NCUA websites. If a bank is not insured and it fails, you lose your money. This is rare but not impossible.

Frequently Asked Questions

Can I move money between banks without paying a fee?

Yes. Banks do not charge you to transfer money out or to receive a transfer in. If your old bank charges a "closing fee," that is unusual and you can often get it waived by calling and asking. Never pay to move your own money.

What if I need the money before the CD matures?

You can withdraw it, but you will pay an early withdrawal penalty, usually equal to a few months of interest. If you think you might need the money, a high-yield savings account is safer because you can withdraw anytime without penalty.

Is my money safe at an online bank?

Yes, as long as the bank is FDIC insured. Online banks are regulated the same way as traditional banks. Your deposits are protected up to $250,000 per account. The only real risk is that you cannot deposit cash in person, so you have to transfer money from another account.

Do I have to keep a minimum balance to earn the advertised rate?

Most online banks do not require a minimum balance to earn the full rate. Some credit unions and money market accounts do. Check the bank's terms before opening an account. If a bank requires a $10,000 minimum and you only have $5,000, you will not earn the advertised rate on the full amount.

What happens to my interest if I withdraw money mid-month?

You earn interest on the money you had in the account for the time it was there. If you deposit $10,000 on the first of the month and withdraw it on the 15th, you earn half a month of interest. Interest is calculated daily at most banks, so the exact amount depends on the day you withdraw.