Published 10:52 am ET April 20, 2023
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Savings account rates have held steady this week, but savers can earn much higher yields now compared to this time last year. While you should compare rates when you’re choosing a savings account, make sure you also review account fees, customer service and whether you can easily bank online.
Savings accounts — all deposit levels
Savings accounts, especially those from traditional brick-and-mortar banks, offered minimal yields after 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.
The highest interest rate on a standard savings account today is 4.64%, per Bankrate, the same as a 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 $1,000 at a 4.64% rate (the current high) for one year, you would earn around $50 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 0.26%, up one basis point since last week. But remember that many banks offer considerably 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 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, you might not need or want a high-yield savings account. In this situation, managing an additional account could be an unnecessary hassle.
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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