Published 11:23 a.m. ET May 5, 2023
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Average savings account rates haven’t budged over the past week, as banks make sense of the Federal Reserve’s continued rate hikes, which are aimed at curbing inflation. These increased borrowing costs are why you now earn significantly more on your deposits compared to this time last year.
This propitious development for savers presents a prime opportunity to boost your emergency fund or funnel money toward a big-ticket purchase. Whatever your motivation, aim for a savings account with a high interest rate, low fees and outstanding customer service, in addition to an easy-to-use digital experience.
Savings accounts — all deposit levels
Commonly referred to as “statement savings accounts” in the banking world, savings accounts paid minimal yields after the Great Recession. The Fed maintained low borrowing costs for several years in order to bolster economic growth.
However, the landscape became topsy-turvy after the government’s extensive spending during the pandemic. The Fed belatedly countered by increasing interest rates at an unprecedented pace in order to offset soaring inflation, prompting banks to raise rates for savers.
The highest interest rate on a standard savings account today is 4.80%, per Bankrate, up a substantial 16 basis points from one week ago. Meanwhile, the average APY (annual percentage yield) for a traditional savings account, as reported by Bankrate, is 1.28%.
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 $10,000 at a 4.80% rate (the current high) for one year, you would earn approximately $500 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 0.25%, unmoved over the past week. But remember that many banks offer substantially higher rates.
Some of the top high-yield savings accounts, for instance, currently feature rates of 4.00% or higher.
Frequently Asked Questions (FAQs)
A high-yield savings account is ideal for those who require a readily accessible option for funds but won’t touch them 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, you might not need or want a high-yield savings account. In this situation, 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.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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