Interest rates change daily and vary by bank and account type

The interest rate your bank offers you depends on three things: what the Federal Reserve has set as its benchmark rate, what your bank decides to pay, and what type of account you hold. You cannot shop for a single "the" interest rate because savings accounts at one bank might pay 4.5% while another pays 2.1% for the same account type. Checking accounts almost never pay interest at all, or pay less than 0.01%.

Banks publish their current rates on their websites, usually under "rates" or "savings rates" in the footer or main navigation. Credit unions do the same. Online banks tend to publish rates more prominently because higher rates are part of how they compete. You can also call a bank's customer service line and ask what they are currently paying on a savings account or money market account.

The rates you see today will not be the same next month. When the Federal Reserve raises or lowers its benchmark rate, banks typically adjust what they pay within days or weeks. Some banks move faster than others, and some move only partway. A bank that paid 4.5% last month might pay 4.25% this month if the Fed cut rates, or it might stay at 4.5% while competitors drop to 3.8%.

Key Takeaways

  • Interest rates on savings accounts and money market accounts vary by bank and change when the Federal Reserve adjusts its benchmark rate.
  • You can find a bank's current rates on its website under "rates" or "savings rates", or by calling customer service.
  • Online banks and credit unions often publish rates more visibly than traditional banks because they compete partly on rate.
  • The rate you see today may be different next month, so compare rates across multiple banks before moving money.
  • Checking accounts rarely pay interest, and when they do, the rate is usually below 0.01%.

How to compare rates across banks

Start by listing the banks you already use or have heard of, then visit each one's website and write down the rate they show for a savings account. Do the same for one or two online banks — they are usually easier to navigate to the rates page. Write down the account name, the rate shown, and the date you looked, because rates change and you want to know how old your information is.

Pay attention to what type of account each rate applies to. A "high-yield savings account" at one bank might pay 4.5%, while a "regular savings account" at the same bank pays 0.01%. The names vary by bank, but the difference is real: high-yield accounts usually require a higher opening deposit or have other conditions, while regular savings accounts are simpler to open.

If you see a rate that looks too high compared to others, read the fine print. Some banks offer a promotional rate for the first few months, then drop to a much lower rate. Others require you to maintain a minimum balance or make a certain number of deposits per month. The rate that matters is the one you will actually earn after any promotional period ends and under conditions you can meet.

What the Federal Reserve rate means for your savings

The Federal Reserve sets a benchmark interest rate that influences what banks pay on savings and charge on loans. When the Fed raises its rate, banks usually raise what they pay on savings accounts within a few weeks. When the Fed lowers its rate, banks usually lower what they pay, though sometimes more slowly.

You do not need to understand Federal Reserve policy to use this information. The practical point is: if you hear that the Fed has raised rates, it is a good time to check whether your bank has raised what it pays on your savings account. If your bank has not moved, or has moved less than competitors, it may be worth moving your money to a bank that pays more.

The Fed's current rate is public information published on the Federal Reserve's website. Financial news outlets also report when the Fed makes changes. You do not need to monitor this constantly — a quick search for "Federal Reserve interest rate" will show you the current benchmark, and you can compare that to what your bank is paying.

Why banks pay different rates

Banks set their own rates based on what they need to attract deposits and what they can afford to pay. A bank that has plenty of deposits and does not need more money might pay a lower rate. A bank that is newer or smaller and needs to grow might pay a higher rate to attract customers. Online banks often pay higher rates because they have lower overhead costs — no physical branches to maintain — so they can afford to pass some of that savings to you.

Banks also pay different rates depending on how much money you deposit. A savings account that requires a $100,000 minimum deposit might pay more than one that requires $1. The bank is paying for the privilege of holding a large sum of your money. If you have a smaller amount to save, you will not see those higher rates.

The rate also depends on how long the bank can keep your money. A regular savings account lets you withdraw anytime, so the bank pays a lower rate because it cannot count on having your money for long. A certificate of deposit (CD) locks your money away for a set period — three months, one year, five years — so the bank pays a higher rate because it knows exactly how long it will have the funds.

How interest rates affect different account types

Savings accounts and money market accounts earn interest based on the rate the bank publishes. The interest is usually calculated daily and added to your account monthly. If your account pays 4.5% annual percentage yield (APY), that means if you kept $1,000 in the account for a full year without withdrawing or depositing, you would earn about $45 in interest.

Checking accounts almost never earn interest. Some banks offer checking accounts that pay a small amount — 0.01% or less — but most pay nothing. The bank uses the money in your checking account to make loans and investments, and does not pay you for that use.

Certificates of deposit (CDs) lock in a rate for a set period. If you open a one-year CD at 5.0% APY, you will earn 5.0% for that full year no matter what happens to other rates. The tradeoff is that you cannot withdraw the money without paying a penalty, usually a few months of interest. CDs are useful if you know you will not need the money for a specific period and want to lock in a rate.

When to move your money to a higher-paying account

If your current bank is paying significantly less than other banks — more than 0.5% lower — it usually makes sense to move your savings. The difference adds up. On $10,000, the difference between 2.0% and 4.5% is $250 per year. On $50,000, it is $1,250 per year.

Moving money is straightforward. Open a new savings account at the bank offering the higher rate, then transfer your money from your old account. Most banks can do this electronically in one to three business days. You do not have to close your old account immediately — you can leave it open with a small balance if you want to keep it, or close it once the transfer is complete.

The main reason not to move is if you use other services at your current bank and value the relationship. Some banks offer perks like fee waivers or higher rates on checking accounts if you keep a savings account with them. If those perks are worth more to you than the interest rate difference, staying makes sense. But if you are purely comparing interest rates, moving to a higher-paying bank is a straightforward way to earn more on your savings.

Frequently Asked Questions

How often do banks change their interest rates?

Banks can change rates anytime, though most make changes when the Federal Reserve adjusts its benchmark rate. Some banks change rates weekly or monthly based on market conditions. Check your bank's website or call to confirm the current rate rather than assuming it is the same as last month.

Is a high-yield savings account safe?

Yes, as long as the bank is insured by the FDIC (Federal Deposit Insurance Corporation). FDIC insurance protects your deposits up to $250,000 per account type at each bank. The rate the bank pays does not affect the safety — a high-yield account at an FDIC-insured bank is just as safe as a regular savings account.

What is APY and how is it different from interest rate?

APY stands for annual percentage yield. It shows what you will earn in a year including the effect of compounding — when interest earned gets added to your balance and then earns interest itself. A bank might quote you an interest rate, but APY is the number that matters for comparing accounts because it shows the real amount you will earn.

Can I lock in a rate before it drops?

Yes, by opening a certificate of deposit (CD). A CD locks in the rate for a set period — three months to five years or longer. If you think rates will drop, opening a CD now lets you keep the current higher rate for the full CD term. The tradeoff is that you cannot withdraw the money without paying a penalty.

Do I need to move my money to earn a better rate?

Yes, in most cases. Your current bank will not automatically raise your rate to match competitors. You have to move your money to a bank offering a higher rate. Some banks offer rate increases to existing customers if you ask, but this is rare — moving is the standard way to earn more interest.