Savings account rates have inched up in recent weeks, and rates remain far higher than a year prior. While high yields are surely paramount in your evaluation of a potential savings account, don’t forget to take fees, customer service and customer-friendly digital experience into account as well.
Savings accounts, especially those from traditional brick-and-mortar banks, offered negligible yields in the aftermath of the Great Recession as the Fed slashed short-term rates to near zero, and kept them there for years, in order to hasten the economy’s recovery.
This status quo was upended after the federal government’s massive spending throughout the pandemic, which helped push inflation toward highs not seen in decades. The Fed responded to the economic effects of lockdowns and rounds of stimulus bills by increasing interest rates to offset soaring inflation, prompting banks to raise rates for savers.
Savings account rates — $2,500 minimum deposit
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 is 0.18%, a tick higher than last 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 about $500 in interest, assuming daily compounding and no additional contributions.
Frequently asked questions (FAQs)
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.
A savings account offers a secure space for you to store money that isn’t required for daily use. Keeping savings separate from your everyday funds can help reduce the temptation to spend impulsively.
A savings account can act as a rainy-day fund, earning interest while maintaining liquidity.
