Over the past week, average savings account rates have inched up all while banks try to figure out how much higher the Federal Reserve will raise interest rates, if at all.
This favorable situation for savers offers an excellent chance to strengthen your emergency fund or save for a major purchase. Regardless of your goal, strive to find a savings account that features a competitive interest rate, minimal fees and exceptional customer service, along with a seamless digital user experience.
Savings accounts provided anemic yields following the Great Recession thanks to the Fed keeping borrowing costs low in order to cajole economic growth.
This low-rate environment was abandoned, however, following the government’s extensive spending during the pandemic, which caused the Fed to significantly boost interest rates to offset soaring inflation. That then prompted banks and credit unions to raise rates for savers.
Savings accounts — $2,500
The highest interest rate on a standard savings account today is 4.88%, per Curinos, the same as a week ago. Meanwhile, the average APY (annual percentage yield) for a traditional savings account, as reported by Curinos, is 0.17%, up slightly from last week.
APY represents the actual return your account will generate in a year, taking into account compound interest — the interest earned on both the principal and previously accumulated interest in your account.
For instance, if you were to invest $2,500 at a 4.88% rate (the current high) for one year, you would earn roughly $125 in interest, assuming daily compounding and no additional contributions.
Savings account rates — $10,000 minimum deposit
The average APY for savings accounts requiring a minimum deposit of $10,000 was 0.18%, up zero basis points over the past week. However, numerous financial institutions offer substantially higher rates.
Some of the top high-yield savings accounts, for instance, currently feature rates of 4.00% or higher.
Per Curinos, the highest interest rate today on a savings account requiring a minimum deposit of $10,000 is 4.88%. If you were to invest $10,000 at a 4.88% rate (the current high) for one year, you would earn approximately $500 in interest, assuming daily compounding and no additional contributions.
Frequently asked questions (FAQs)
A high-yield savings account is essentially a standard savings account that offers a higher interest rate on deposits. (It’s more of a description than a technical definition.) This rate can fluctuate based on the broader financial market and the specific bank or credit union’s business requirements.
A high-yield savings account is still a savings account—you can’t access your funds by writing checks and your withdrawals are typically limited.
A high-yield savings account is ideal for those who require a readily accessible option for funds that won’t be touched more than once a week. It’s a recommended choice for most people.
However, if you already have a well-balanced investment portfolio with high earning potential and a convenient savings account with a trusted bank, managing an additional account could be an unnecessary hassle.
