In late 2024, the Federal Reserve made the notable decision to cut its target rate three times, leading to a decline in savings interest rates that had previously reached historic highs. Given this shift, it’s essential to ensure you’re securing the most favorable rate when exploring savings account options. Let’s delve into the current landscape of savings interest rates and identify where you can find the top offers today.
Currently, the national average savings account rate is 0.42%, according to the FDIC. While this might not seem significant at first glance, it’s quite a jump from just three years ago when the rate languished at a mere 0.06%, highlighting a substantial increase over a relatively short period.
As of now, the most competitive savings account rate offered by our partners stands at 4.75% APY, courtesy of Openbank, though it requires a minimum opening deposit of $500.
Considering that these rates might not stick around for much longer, it could be a smart move to open a high-yield savings account now, so you can benefit from the attractive rates currently available.
Here’s a snapshot of some of the best savings rates on the market today from our vetted partners:
Related: Check out the 10 best high-yield savings accounts available today>>
The interest you earn on a savings account primarily hinges on the annual percentage rate (APY). This rate outlines your total earnings over one year while factoring in both the base interest rate and the frequency of interest compounding, which is typically daily for savings accounts.
For example, if you deposit $1,000 into a savings account with the average interest rate of 0.42% and daily compounding, your balance after one year would increase modestly to $1,004.21, meaning your initial $1,000 would gain just $4.21 in interest.
But let’s say you opt for a high-yield savings account offering a 4% APY. With that choice, your balance would grow more significantly to $1,040.81 over the same duration — that’s $40.81 earned in interest.
The larger your deposit, the more interest you accrue. Taking our high-yield account example with a 4% APY further: if you deposit $10,000, after a year, your total balance would rise to $10,408.08, netting you $408.08 in interest earnings.
Read more: Discover what constitutes a good savings account rate.
