The main ways to increase what your savings account earns
The interest rate your bank pays you depends on three things you can actually control: the type of account you hold, the bank you choose, and how much money you keep in it. You cannot negotiate the rate itself — banks set those based on what the Federal Reserve does — but you can move your money to a place that pays more, switch to a higher-yield account type, or meet a minimum balance requirement that unlocks a better rate.
The difference between a 0.01% rate and a 4.5% rate on $10,000 is roughly $450 a year. That gap exists right now, between what traditional banks offer and what online banks or credit unions offer. The work to close it takes an afternoon.
Key Takeaways
- Online banks and credit unions typically pay 4% to 5% annual interest on savings, while traditional brick-and-mortar banks often pay 0.01% to 0.05%.
- High-yield savings accounts are the same as regular savings accounts in how they work, but the bank pays you more because it has lower overhead costs.
- Some banks pay higher rates only if you maintain a minimum balance — often $1,000 to $25,000 — so check whether you can meet that requirement before opening.
- Moving money between banks takes three to five business days, so you do not lose interest during the transfer if you time it right.
- Money market accounts and certificates of deposit (CDs) sometimes pay more than savings accounts, but they restrict how often you can withdraw or lock your money away for months or years.
High-yield savings accounts at online banks
Online banks pay more interest because they do not run physical branches. They pass the savings to you. A high-yield savings account works exactly like a regular savings account — you deposit money, the bank holds it, you can withdraw it whenever you want — except the interest rate is typically 4% to 5% right now, compared to 0.01% to 0.05% at most traditional banks.
The tradeoff is that you cannot walk into a branch or talk to someone in person. You manage everything through a website or app. If you need to deposit cash, you either transfer it from another bank account or use an ATM network the bank partners with. Most online banks are FDIC-insured, meaning your money is protected up to $250,000 if the bank fails.
Popular online banks that offer high-yield savings include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank. Rates change frequently — sometimes weekly — so check the current rate on the bank's website before you open an account. The rate you see when you sign up is the rate you lock in for as long as you hold the account, but the bank can lower it in the future.
Credit unions and their member savings rates
Credit unions are member-owned financial institutions that sometimes pay higher interest on savings than banks do. You have to be a member to open an account, which usually means living or working in a certain area, belonging to a specific employer, or joining an organization the credit union serves. Membership is often free or costs a small one-time fee.
Credit unions are also FDIC-insured (technically NCUA-insured, which works the same way). Their rates vary widely — some pay as much as online banks, others pay less — so you need to check what your local or employer credit union offers. If you already have a checking account at a credit union, ask whether they offer a high-yield savings product.
Minimum balance requirements and tiered rates
Some banks pay a higher interest rate only if you keep a certain amount of money in the account. A bank might pay 0.5% on balances under $10,000 and 2% on balances of $10,000 or more. If you cannot maintain the minimum, you get the lower rate. Read the fine print before you open the account.
Tiered rates work the same way: the more money you have in the account, the higher the rate on all of it. If you have $50,000 to deposit, a tiered account might pay you more than a flat-rate account. If you have $2,000, the flat-rate account probably wins. Use a calculator on the bank's website to compare, or ask customer service what you would earn at your expected balance.
Money market accounts and certificates of deposit
A money market account is a hybrid between a savings account and a checking account. It usually pays higher interest than a savings account, but it limits how many times you can withdraw per month — often three to six withdrawals. If you need to access your money frequently, this restriction makes it less useful than a regular savings account, even if the rate is higher.
A certificate of deposit (CD) locks your money away for a set period — typically three months to five years — in exchange for a higher interest rate. If you withdraw before the term ends, you pay a penalty, usually a few months' worth of interest. CDs make sense if you know you will not need the money for a specific amount of time and you want to may provide a rate that will not drop.
Both money market accounts and CDs are FDIC-insured. The rates are usually higher than savings accounts because the bank gets to hold your money longer or restrict your access to it.
How to move money to a higher-paying bank
Opening an account at a new bank takes 10 to 15 minutes online. You provide your name, address, Social Security number, and initial deposit information. The bank verifies your identity and either approves you immediately or within one business day.
To move money from your old bank to the new one, you have two options. You can transfer it directly using the new bank's transfer tool — you give them your old account number and routing number, and they pull the money over. This takes three to five business days. Or you can withdraw the money from your old bank and deposit it into the new one yourself, which is faster but requires a trip to an ATM or branch.
You do not lose interest during the transfer. Interest accrues daily, so money sitting in your old account still earns until it leaves, and money in your new account starts earning as soon as it arrives. Close the old account after the transfer clears if you do not need it anymore.
Comparing rates and tracking changes
Interest rates on savings accounts change based on what the Federal Reserve does with its benchmark rate. When the Fed raises rates, banks usually raise what they pay you within days or weeks. When the Fed cuts rates, banks cut what they pay you, sometimes immediately. You cannot predict these moves, but you can track them.
Websites like Bankrate, DepositAccounts, and NerdWallet list current rates at different banks and update them daily. You can set up alerts to notify you when a specific bank's rate changes. If your current bank drops its rate significantly and you find a better option elsewhere, moving your money takes a few days and costs nothing.
Some people keep accounts at multiple banks to take advantage of different rates or features. There is no penalty for this — you can have as many savings accounts as you want, as long as your total deposits at any one bank do not exceed $250,000 (the FDIC insurance limit).
Frequently Asked Questions
Can I move my money to a higher-paying bank without losing interest?
Yes. Interest accrues daily, so your old account earns until the money leaves and your new account earns as soon as it arrives. The transfer takes three to five business days, and you earn interest for all of those days. There is no gap where you lose money.
What if my bank lowers its interest rate after I open the account?
Banks can lower rates at any time, and they do not have to ask your permission. If your rate drops and you find a better one elsewhere, you can move your money. There is no penalty for closing a savings account or transferring to another bank.
Is my money safe in an online bank?
Yes, if the bank is FDIC-insured. Check the bank's website or the FDIC's bank search tool to confirm. Your deposits are protected up to $250,000 if the bank fails, the same as at a traditional bank. Online banks are regulated by the same agencies as brick-and-mortar banks.
Do I have to keep a minimum balance to earn the advertised interest rate?
It depends on the bank. Some banks pay the advertised rate on any balance, no matter how small. Others require a minimum — often $1,000 to $25,000 — to earn the full rate. Check the account details before you open it, or ask customer service what rate you would earn at your expected balance.
What is the difference between a high-yield savings account and a regular savings account?
They work the same way — you deposit money, withdraw whenever you want, and earn interest. The only difference is the interest rate. High-yield accounts pay more because the bank has lower costs. There are no hidden fees or restrictions that make a high-yield account riskier or harder to use.