In late 2024, the Federal Reserve took the step of reducing its benchmark interest rate three times, a move that has led to a drop in savings account interest rates from what we’ve seen in recent history. As a result, if you’re in the market for a savings account, it’s crucial to make sure you’re getting the most favorable rate you can. Below, we’ll explore the current landscape of savings interest rates and where you can find the most competitive deals.
According to the FDIC, the national average savings account rate is currently sitting at 0.41%. While this might not seem particularly impressive, it’s a notable increase from the 0.06% rate recorded just three years back, highlighting a significant uptick in a relatively short time.
At the moment, the most attractive savings account rate offered by our partners is an impressive 4.76% APY, available through Patriot Bank, which requires just a $1 minimum opening deposit. Given that these rates may not stick around indefinitely, it could be wise to consider snagging a high-yield savings account now and make the most of today’s advantageous rates.
Here’s a snapshot of some top-tier savings rates presently available from our trusted partners:
Additional Resource: Explore the 10 best high-yield savings accounts currently on the market >>
The interest you earn on a savings account hinges on the annual percentage yield (APY). This percentage reflects your total earnings over a year, taking into account the base interest rate and the frequency of interest compounding (which typically occurs daily in savings accounts).
For example, if you deposit $1,000 into a savings account with the average interest rate of 0.41% and daily compounding, your balance at the conclusion of a year would amount to $1,004.11. This total represents your initial deposit plus a modest $4.11 in earned interest.
Now, if you opt for a high-yield savings account offering 4% APY, the outcome changes dramatically. In this scenario, your year-end balance would rise to $1,040.81, including $40.81 in interest.
The more you deposit in a savings account, the greater your potential return. Illustrating our previous example with a $10,000 deposit in a high-yield savings account with 4% APY, your total balance after a year would swell to $10,408.08, earning you $408.08 in interest.
Further Reading: What makes for a good savings account rate?
