1.5% is below what most banks offer today, but whether it's "good" depends on what you're comparing it to and when you opened the account

A 1.5% annual percentage yield (APY) on a savings account was competitive in 2021 and early 2022. In 2024 and into 2025, it is not. Most online banks now offer 4.25% to 5.35% APY on regular savings accounts, and some money market accounts pay even higher rates. If your bank is paying you 1.5%, you are earning roughly one-third of what you could get by moving your money.

The exception: if you opened your account years ago and have kept the same rate, your bank may have grandfathered you in at an older rate while raising rates for new customers. That is common. If you opened recently and were offered 1.5%, the bank is not competing for your money.

Interest rates on savings accounts move with the Federal Reserve's benchmark rate. When the Fed raises rates, banks raise what they pay depositors. When the Fed cuts rates, banks cut what they pay. The Fed has held rates steady since mid-2023, so the rates banks offer now are the rates they will likely offer for the next several months — unless the Fed moves again.

Key Takeaways

  • Online banks typically pay 4.25% to 5.35% APY on savings accounts, making 1.5% roughly one-third of the current market rate.
  • If you opened your account before 2023, your bank may have kept you at an older rate while offering new customers much higher rates.
  • The difference between 1.5% and 4.5% on $10,000 is about $300 per year in lost interest.
  • Switching banks takes 10 to 15 minutes online and does not close your old account unless you ask it to.
  • Banks that pay 1.5% are usually brick-and-mortar branches; online-only banks pay more because they have lower overhead costs.

How much money you lose by staying at 1.5%

The math is straightforward. On $10,000 in a savings account, 1.5% APY earns you $150 per year. The same $10,000 at 4.5% APY earns $450 per year. That is $300 per year you do not receive — or $25 per month.

On $50,000, the gap widens to $1,500 per year. On $100,000, it is $3,000 per year. These are real dollars that compound over time. If you leave $50,000 in a 1.5% account for five years instead of moving it to a 4.5% account, you will have earned roughly $6,000 less in interest.

The longer your money sits, the larger the opportunity cost. This is why even small differences in APY matter on savings accounts — you are not taking risk, and the money is not locked up, so there is no reason to accept a below-market rate.

Why your bank might be paying 1.5% when others pay 4.5%

Banks that pay 1.5% are almost always traditional brick-and-mortar banks — the kind with physical branches in your town. They have higher costs: rent, staff, security, branch maintenance. They pass some of those costs to customers by paying lower interest rates on deposits.

Online-only banks have no branches. They operate from a few data centers and a customer service phone line. Their cost per customer is much lower, so they can afford to pay higher rates and still make a profit. The trade-off is that you cannot walk into a branch to deposit cash or speak to someone in person.

Some large national banks (Chase, Bank of America, Wells Fargo) pay rates as low as 0.01% to 0.05% on regular savings accounts. They rely on brand recognition and convenience rather than competitive rates. If you bank with one of these institutions, switching to an online bank will dramatically increase what you earn.

Where to find current rates and compare banks

Interest rates change frequently, and different banks update their rates on different schedules. To see what is available right now, check Bankrate.com, DepositAccounts.com, or NerdWallet. These sites list current APY rates from dozens of banks and update them daily.

When you compare, pay attention to three things: the APY (the actual rate you earn), any minimum balance requirement, and whether the rate is may provide or promotional. Some banks offer a high rate for the first three months, then drop it. Read the fine print before you open an account.

Most online banks that pay 4%+ have no minimum balance, no monthly fees, and no promotional period — the rate is what you get as long as you hold the account. A few require $25,000 or $100,000 to open, so check before you apply.

How to move your money from a low-rate bank to a higher-rate bank

Opening a new savings account at a higher-paying bank takes about 10 minutes online. You will need your Social Security number, a government ID, and your current address. The bank will verify your identity and open the account the same day or the next business day.

To move money from your old bank to your new one, you have two options. First, you can transfer money directly using your old bank's website — most banks let you link an external account and move money between them. This usually takes one to three business days. Second, you can withdraw cash and deposit it at the new bank, though this is slower and less convenient.

You do not have to close your old account. Many people keep a small amount in their old bank for convenience (to deposit checks, withdraw cash at a branch) and move the bulk of their savings to the higher-paying account. If you do want to close the old account, you can do that online or by calling the bank.

What to watch for when switching banks

Before you move your money, check whether your new bank is FDIC-insured. This means deposits up to $250,000 are protected by the federal government if the bank fails. Every bank mentioned in this article is FDIC-insured, but it is worth confirming on the bank's website.

Also check the bank's customer service hours and how you can reach them. Some online banks offer phone support 24/7; others have limited hours. If you think you might need to call with questions, test their phone line before you move your money.

Finally, be aware that opening multiple savings accounts in a short time can temporarily lower your credit score slightly. This is because banks do a "hard inquiry" when you open an account. The impact is small and temporary, but if you are planning to apply for a mortgage or car loan in the next month or two, you might want to wait.

When 1.5% might actually be acceptable

There are a few narrow cases where staying at 1.5% makes sense. If your money is in a certificate of deposit (CD) that matures in a few months and you locked in 1.5% for a long term when rates were lower, it usually does not pay to break the CD early — the early withdrawal penalty often wipes out any gain from switching. Wait for it to mature, then move the money.

If you have a very small amount of money (under $1,000) and switching banks feels like too much hassle, the dollar difference is small enough that it might not be worth your time. But if you have $5,000 or more, the time to switch is 15 minutes and the payoff is real.

If your bank offers other benefits that matter to you — a local branch where you deposit cash regularly, a good mobile app, or bundled services like checking and savings together — you might choose to stay despite the lower rate. That is a personal decision, but at least you will know what you are giving up.

Frequently Asked Questions

Will my rate go down if I move my money to a new bank?

Not unless the Fed cuts rates or the bank changes its policy. When you open a new account, the rate you see is the rate you lock in. It will stay the same until the bank lowers it across all accounts — which happens when the Fed cuts rates, not because you switched banks. You can always move again if rates drop.

Do I lose FDIC protection if I move my money between banks?

No. FDIC protection follows your money. As long as your new bank is FDIC-insured (which all major online banks are), your deposits up to $250,000 are protected. If you keep money at multiple banks, each bank's deposits are insured separately up to $250,000.

What if my bank says they will match a higher rate if I ask?

Some banks will match a competitor's rate if you ask, especially if you have been a customer for years. It is worth calling and asking, but do not expect it — most banks will not. If they refuse, you have your answer about whether they value your business.

Is there a penalty for closing my old savings account?

Most savings accounts have no closing fee. You can close the account online or by calling the bank. If there is a fee, it will be listed in the account agreement or on the bank's website. Read before you close, but in practice, closing fees are rare.

Should I move my money if rates might drop soon?

If you think the Fed will cut rates, that is actually a reason to move now. Once you lock in 4.5%, you keep that rate until the bank lowers it. If rates drop to 3%, you will be earning more than new customers. You cannot time the market perfectly, so move when rates are good and keep your money there.