In late 2024, the Federal Reserve made a significant move by reducing its target rate three times, leading to a dip in savings interest rates. As a result, it has become crucial for individuals to ensure they are securing the most competitive rates when exploring savings account options. Let’s delve into the current scenario regarding savings interest rates and where you can find the most attractive deals.
The Federal Deposit Insurance Corporation (FDIC) has reported that the national average savings account rate is currently 0.41%. It might not sound particularly impressive, but it’s worth noting that this figure has risen from just 0.06% a mere three years ago.
While the national average savings interest rate might seem relatively low in comparison to other financial products like certificates of deposit (CDs) and investments, there are savings accounts in the market today that offer significantly higher returns. In fact, some of the best rates available are 4% APY or even more.
Among the available options from our partners, Openbank is offering a standout rate of 4.75% APY, although it does require a minimum opening deposit of $500.
For those interested in exploring their options, we’ve compiled a list of some of the top savings rates currently available from our verified partners.
Additionally, you might want to check out our related guide: 10 Best High-Yield Savings Accounts Today.
The amount of interest earned from a savings account is measured by the annual percentage yield (APY). This figure reflects the total earnings over the course of a year, factoring in both the base interest rate and the frequency of compounding, which is typically on a daily basis for savings accounts.
To illustrate, if you deposit $1,000 into an account with the average interest rate of 0.41% with interest compounding daily, your balance would grow to $1,004.11 after a year. This comprises your $1,000 initial deposit plus just $4.11 in accrued interest.
Alternatively, if you opt for a high-yield savings account offering a 4% APY, your balance would rise to $1,040.81 in one year, resulting in $40.81 in interest earnings.
The more you deposit, the greater your potential earnings. Using the same high-yield savings account at a 4% APY as an example, depositing $10,000 would result in a total balance of $10,408.08 after one year, translating to $408.08 in interest.
For further insights, consider reading: What Is a Good Savings Account Rate?
