Interest rates change constantly, and what you earn depends on the bank and account type

There is no single "the" interest rate right now. Banks set their own rates on savings accounts, money market accounts, and certificates of deposit (CDs). The rate you see at one bank might be different at another, even on the same day. Rates also move up and down based on what the Federal Reserve does with its benchmark rate, which it adjusts several times a year.

The rates you will find today are higher than they were in 2020 and 2021, when the Federal Reserve kept rates very low. But they are lower than they were in late 2023. If you are shopping for a place to put your money, you need to check what specific banks are offering right now, because the number changes and varies by institution.

Key Takeaways

  • Each bank sets its own interest rate on savings and money market accounts, so the rate at one bank is not the rate at another.
  • Online banks typically offer higher rates than brick-and-mortar banks because they have lower overhead costs.
  • The rate you lock in on a CD stays the same for the full term, but savings account rates can go up or down at any time.
  • The Federal Reserve's actions influence whether banks raise or lower their rates, but do not directly set what you earn.

How to find the current rates banks are actually offering

The fastest way is to visit the websites of banks you are considering and look for their rates on the savings or CD page. Most banks list current rates prominently. Write down the rate, the account type, and the minimum deposit required, because all three affect what you actually earn.

If you want to compare many banks at once without visiting each site, financial websites like Bankrate, DepositAccounts, and NerdWallet pull rates from hundreds of banks and update them regularly. These sites let you filter by account type and sort by rate, which saves time if you are trying to find the highest rate available.

Keep in mind that promotional rates—sometimes called "bonus rates"—are temporary. A bank might offer 5.00% for the first three months, then drop to 4.50% after that. Read the fine print to see when the rate changes and what the regular rate will be.

Why online banks usually have higher rates than traditional banks

Online banks do not have physical branches, so they spend less money on buildings, staff, and overhead. They pass some of that savings to customers in the form of higher interest rates. A traditional bank with hundreds of branches might offer 4.25% on a savings account, while an online bank offers 4.75% on the same type of account.

The tradeoff is convenience. With an online bank, you cannot walk into a branch to deposit cash or speak to someone in person. Most online banks let you deposit checks by taking a photo with your phone, and they reimburse ATM fees if you use an out-of-network machine. But if you need to handle cash regularly or prefer face-to-face service, a traditional bank might be worth the lower rate.

The difference between fixed rates on CDs and variable rates on savings accounts

A CD (certificate of deposit) locks in a rate for a set period—usually three months, six months, one year, or five years. If you open a one-year CD at 5.00%, you earn 5.00% for the full year no matter what happens to rates in the market. When the year is up, you can withdraw your money or roll it into a new CD at whatever the current rate is.

A savings account has a variable rate, which means the bank can change it at any time. If rates go up, your rate might go up too. If rates go down, your rate will likely go down. You do not have to do anything—the change just happens. This is why a savings account rate today might not be the same rate next month.

CDs are useful if you want to lock in a good rate and you know you will not need the money for a while. Savings accounts are more flexible because you can withdraw whenever you want, but you take the risk that rates will fall.

How the Federal Reserve influences the rates you see

The Federal Reserve sets a target range for the federal funds rate, which is the rate banks charge each other for overnight loans. Banks do not charge you this rate directly, but it influences what they offer you. When the Fed raises its rate, banks usually raise the rates they offer on savings accounts and CDs. When the Fed lowers its rate, banks usually lower yours too.

The Fed meets eight times a year to decide whether to raise, lower, or hold its rate steady. You can find the Fed's announcement schedule on the Federal Reserve's website. If the Fed is expected to raise rates soon, some people move money into CDs to lock in the current rate before it goes up. If the Fed is expected to cut rates, some people keep money in savings accounts to stay flexible.

What minimum deposit and account features mean for your actual earnings

A bank might advertise 5.25% on a savings account, but that rate might only apply if you keep a minimum balance of $25,000. If you have $5,000, you might earn a lower rate. Always check the minimum deposit requirement before you get excited about a rate.

Some accounts also have limits on how many times you can withdraw per month, or they charge a monthly fee if your balance drops below a certain level. A high rate does not matter if you pay $10 a month in fees. Read the full account terms, not just the rate number.

Why rates are different for different account types

Banks offer different rates on savings accounts, money market accounts, and CDs because they use the money differently. A CD ties up your money for a set period, so the bank can lend it out with confidence and offers you a higher rate. A savings account lets you withdraw anytime, so the bank takes more risk and offers a lower rate. A money market account usually falls in between.

Within each type, rates also vary by term. A five-year CD usually pays more than a one-year CD because you are committing your money for longer. A one-year CD might pay 4.75%, while a five-year CD pays 5.10%.

Frequently Asked Questions

Do I have to use the bank with the highest rate?

No. The highest rate matters only if the bank is safe and the account meets your needs. All banks insured by the FDIC protect your money up to $250,000 per account, so safety is not the issue. But if the highest-rate bank has a $50,000 minimum and you have $10,000, you cannot use that rate anyway. Pick a bank with a good rate, low fees, and terms that fit your situation.

What happens to my rate if I already have an account open?

If you have a savings account, your rate can change at any time without notice. If you have a CD, your rate is locked in until the CD matures. When it matures, the bank will offer you a new rate for a new CD, which might be higher or lower than what you had.

Can I move my money to a different bank if rates go up somewhere else?

Yes. You can withdraw from your current account and deposit at a new bank anytime. If you have a CD and want to move before it matures, you will usually pay an early withdrawal penalty, which is a fee the bank charges. Check what the penalty is before you open a CD so you know the cost if you need to leave early.

Are the rates I see online the same rates I will actually get?

Usually yes, but not always. Some banks show rates that apply only to new customers or only to certain states. When you start the account, the bank will confirm the rate you will receive. If it is different from what you saw, ask why before you finish opening the account.

How often do banks change their rates?

Banks can change savings account rates whenever they want, and many do it weekly or monthly. CD rates change less frequently but still move several times a year. The best way to know if a rate has changed is to check the bank's website or call and ask.