Current savings account interest rates vary by bank and account type, ranging from nearly 0% at traditional banks to 4% to 5.35% at online banks as of early 2024
The amount your savings account earns depends almost entirely on where you keep the money. A big national bank might pay 0.01% annual interest, meaning $10,000 earns $1 per year. An online bank offering a high-yield savings account might pay 4.5% on the same $10,000, earning $450 per year. The difference comes down to how much the bank pays for the right to hold your money.
Interest rates change constantly and are set by each bank independently. There is no single "savings account rate"—only the rate your specific bank offers on your specific account. Rates also depend on the account type: money market accounts sometimes pay more than basic savings accounts at the same bank, and certificates of deposit (CDs) usually pay more than either, but lock your money away for a set time.
The Federal Reserve's benchmark interest rate influences what banks offer, but does not determine it. When the Fed raises its rate, banks eventually raise what they pay depositors—but not always by the same amount, and not always quickly. When the Fed cuts rates, banks drop their rates faster than they raised them.
Key Takeaways
- Online banks typically pay 4% to 5.35% on savings accounts, while traditional brick-and-mortar banks often pay 0.01% to 0.05%.
- Interest rates are set by each individual bank and change without notice, so the rate you see today may not be the rate you get tomorrow.
- Money market accounts and CDs at the same bank usually pay more than regular savings accounts, but have different rules about withdrawals or lock-in periods.
- Your actual earnings depend on your balance, how long you keep the money in the account, and how often interest compounds.
How banks decide what rate to offer
Banks set their savings rates based on what they can earn by lending out customer deposits. If a bank can lend money at 6% and needs to pay depositors 4.5%, the bank keeps the difference as profit. When lending demand is low or competition for deposits is high, banks raise what they pay. When lending is strong or deposits are plentiful, they lower rates.
Online banks typically pay more than traditional banks because they have lower overhead costs—no branch buildings, fewer employees, no tellers. They pass some of that savings to depositors in the form of higher interest rates. Traditional banks maintain physical locations and staff, which costs money, so they can afford to pay less.
The size of your balance does not usually affect the interest rate itself—a $500 account and a $50,000 account at the same bank earn the same percentage. However, some banks offer tiered rates where larger balances earn slightly more, and some accounts have minimum balance requirements to earn any interest at all.
What you actually earn depends on compounding frequency
A bank's advertised rate is the annual percentage yield (APY), which already includes the effect of compounding. Compounding means the bank pays interest on your interest. If your account compounds daily, you earn a tiny bit of interest each day, and the next day you earn interest on that interest too.
Most online savings accounts compound daily, which is better than monthly or quarterly compounding. The difference is small on modest balances—on $10,000 at 4.5% APY, daily compounding versus monthly compounding might earn you an extra $1 or $2 per year—but it adds up on larger amounts or over many years.
The bank must tell you the APY before you open the account. This number already accounts for how often interest compounds, so you can compare rates directly between banks without doing math yourself.
How rates have changed and what affects them going forward
In 2022 and 2023, the Federal Reserve raised its benchmark rate sharply to fight inflation, and online banks responded by raising savings rates from around 0.5% to over 5%. In late 2023 and early 2024, the Fed held rates steady, and online banks began lowering their rates slightly as competition for deposits eased. Rates may continue to fall if the Fed cuts its benchmark rate, or they may hold steady if the Fed keeps rates where they are.
No one can predict where rates will go. Banks do not announce rate changes in advance, and they can change rates at any time. Some banks lower rates gradually; others drop them suddenly. If you want to lock in a higher rate, a CD guarantees that rate for a set period—typically three months to five years—but you cannot withdraw the money without paying a penalty.
Comparing rates across different account types
| Account Type | Typical Rate Range | When Interest Compounds | Withdrawal Rules |
|---|---|---|---|
| Traditional savings account | 0.01% to 0.05% | Monthly or quarterly | Unlimited withdrawals |
| High-yield savings account | 4% to 5.35% | Daily | Unlimited withdrawals |
| Money market account | 4% to 5.25% | Daily | Limited check writing; withdrawal limits may apply |
| 3-month CD | 4.5% to 5.4% | Daily | Money locked until maturity; early withdrawal penalty |
| 1-year CD | 4.5% to 5.4% | Daily | Money locked until maturity; early withdrawal penalty |
| 5-year CD | 4% to 5.2% | Daily | Money locked until maturity; early withdrawal penalty |
High-yield savings accounts and money market accounts at online banks pay roughly the same rate, but money market accounts sometimes offer check-writing privileges or a debit card. Both allow you to withdraw money whenever you need it, unlike CDs.
CDs typically pay slightly more than savings accounts because you agree not to touch the money for a set time. The longer the CD term, the more you might expect to earn—but this is not always true. Sometimes a 3-month CD pays as much as a 1-year CD, depending on what the bank thinks interest rates will do.
Where to find current rates for different banks
No single website lists every bank's current rate, because rates change constantly and banks do not report them to a central database. However, several sites aggregate rates from major banks and update them regularly. Bankrate, DepositAccounts, and DepositRates all show current rates across multiple banks and account types.
The most accurate way to find a rate is to visit the bank's website directly. The rate shown on a comparison site may be a day or two old. If you are comparing banks, check the official website of each one you are considering, because the difference between 4.5% and 5.35% is real money over time.
When you find a rate you like, open the account before the bank lowers it. Rates can drop without warning, and you cannot go back to a higher rate once you have opened the account—you would have to close it and open a new one elsewhere.
What happens to your interest if you move money or close the account
Interest accrues daily but is usually deposited monthly. If you withdraw money mid-month, you still earn interest on the balance you held up to that point. If you close the account, the bank pays you any accrued interest that has not yet been deposited, plus your principal.
Some banks charge a fee for closing an account within a certain time frame—often 90 days to six months. Check the account terms before opening to see if there is a closure fee. If you move your money to another bank, the interest you earned stays with you; the old bank does not keep it.
If you have a CD and withdraw before it matures, the bank charges an early withdrawal penalty. This penalty is usually a certain number of months of interest. On a 1-year CD paying 5%, an early withdrawal penalty might be three months of interest, meaning you lose $125 on a $10,000 CD if you withdraw after six months. Read the CD terms carefully to know what the penalty is.
Frequently Asked Questions
Why does my bank pay almost no interest?
Traditional banks with physical branches have higher costs and less competition for deposits, so they can afford to pay less. If your bank pays 0.01%, switching to an online bank paying 4.5% would earn you hundreds of dollars per year on the same balance. There is no reason to keep money in a low-paying account unless you need the branch for other services.
If I move my money to a different bank, do I lose the interest I already earned?
No. Interest you have already earned is yours to keep. When you close the account and move the money, the old bank pays you your principal plus any accrued interest. The new bank starts paying interest on the new balance from the day you deposit it.
Can a bank lower my interest rate after I open the account?
Yes. Banks can change savings account rates at any time without notice. If you want to lock in a rate, open a CD instead—the rate is may provide for the full term. Once a CD matures, the bank may offer a lower rate on a new CD, and you can choose to move the money elsewhere.
Is a CD worth it if rates might drop?
A CD locks in your current rate, which protects you if rates fall. If rates rise instead, you are stuck with the lower CD rate and cannot access your money without paying a penalty. CDs make sense if you do not need the money for a set time and want to may provide a rate. For money you might need sooner, a high-yield savings account is more flexible.
How much interest will I actually earn on my balance?
Multiply your balance by the APY to get a rough annual figure. On $10,000 at 4.5% APY, you earn about $450 per year, or roughly $37.50 per month. On $50,000 at the same rate, you earn about $2,250 per year. The exact amount depends on how often the bank compounds interest and whether your balance changes during the year.