Interest rates change constantly, so the "best" bank depends on when you're reading this
There is no single bank that always has the highest savings rate. Banks change their rates weekly or even daily based on what the Federal Reserve does and what their competitors offer. A bank offering 4.50% this month might drop to 4.25% next month. The bank with the lowest rate today might raise it tomorrow.
What matters is knowing where to look and how to compare. Online banks almost always pay more than brick-and-mortar banks because they have lower overhead costs. Among online banks, the rates cluster fairly close together—usually within 0.25% of each other—so the difference between the "best" and "second best" is often just a few dollars per year on smaller balances.
The fastest way to find current rates is to visit the websites of online banks directly and compare their advertised rates side by side. You can also use rate-tracking sites like Bankrate, DepositAccounts, or the FDIC's National Rates and Rate Caps tool, which update multiple times per day.
Key Takeaways
- Online banks typically offer 4% to 5% on savings accounts, while traditional banks often offer less than 1%, because online banks have lower costs.
- Rates change constantly, so checking directly on a bank's website or a rate-tracking site gives you the most current information.
- The difference between the highest and second-highest rate is usually small enough that other factors—like ease of withdrawal or customer service—may matter more to you.
- All deposits up to $250,000 are insured by the FDIC at any bank, so choosing based on rate rather than safety is reasonable.
- Some banks offer higher rates only on accounts you open through specific channels or with specific conditions, so read the fine print before opening.
Why online banks pay more than traditional banks
A traditional bank with physical branches pays rent, utilities, and salaries for tellers and managers in every location. Those costs get passed to customers through lower interest rates on savings. An online bank has no branches, no tellers, and minimal staff. That savings gets passed to you as higher interest rates.
Online banks also tend to be smaller and newer, so they compete aggressively on rate to attract deposits. They need your money to lend out, and offering a higher rate is their main tool to get it. Traditional banks rely on convenience and brand recognition, so they don't need to compete as hard on rate.
How to compare rates across multiple banks
Start by visiting the websites of three to five online banks and writing down their current savings account rates. Good banks to check include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, and Capital One 360. Each publishes its rate on the homepage or savings account page.
As you compare, note whether the rate applies to all balances or only balances above a certain amount. Some banks pay one rate on the first $25,000 and a lower rate on anything above that. Others pay the same rate on all balances. This matters if you're planning to save a large amount.
Also check whether the bank requires a minimum deposit to open the account or to earn the advertised rate. Most online banks have no minimum, but some require $500 or $1,000 to start. If you're opening with a small amount, this could disqualify a bank even if its rate is highest.
What to look for beyond the interest rate
The highest rate is not always the best choice if the bank makes it hard to access your money. Check how many free withdrawals you get per month. Some banks limit you to six withdrawals per statement period before charging a fee. If you plan to withdraw money frequently, a bank with unlimited withdrawals at a slightly lower rate might be better.
Also consider how you'll deposit money. If you get paid by direct deposit, most online banks make that easy. If you need to deposit checks, check whether the bank has mobile check deposit (you photograph the check with your phone) or whether you have to mail checks in. Mailing takes five to ten business days.
Customer service matters if something goes wrong. Some online banks offer phone support during business hours only. Others offer 24/7 support. If you think you might need to call with a question, test their phone line before you open an account—call and see how long you wait.
How rate changes affect what you earn
A difference of 0.50% per year sounds small, but it adds up. On $10,000, the difference between 4.50% and 4.00% is $50 per year. On $50,000, it's $250 per year. On $100,000, it's $500 per year. If you're saving a large amount, chasing the highest rate makes sense.
But remember that rates fall as well as rise. If you open an account at a bank offering 5.00% and rates drop to 3.50% across the industry, your bank will drop its rate too. You can't lock in a rate on a regular savings account the way you can with a certificate of deposit (CD). So don't choose a bank based on today's rate alone—choose based on whether it's a bank you'd be comfortable with if rates dropped.
When to move your money to a different bank
If your current bank's rate falls significantly behind the industry average, moving your money is straightforward. Most online banks offer a service called ACH transfer, which lets you move money from your old bank to your new bank in one to three business days at no cost. You don't have to close your old account—you can leave it open or close it after the transfer clears.
The main reason to move is if your bank drops its rate while competitors raise theirs. For example, if your bank offers 3.50% and five competitors offer 4.75%, moving could earn you an extra $125 per year on $10,000. That's worth the fifteen minutes it takes to open a new account and transfer the money.
One thing to watch: some banks offer a promotional rate for the first few months, then drop it. Read the terms before opening. If the rate is promotional, ask what the regular rate will be after the promotion ends. If it drops to 2.00%, that bank is not a good long-term home for your savings.
Understanding FDIC insurance and why it matters
Every bank mentioned here is FDIC-insured. That means if the bank fails, the federal government guarantees your deposits up to $250,000 per account. This is true whether the bank is online or has branches, and whether the rate is 0.01% or 5.00%. You are not taking on extra risk by choosing an online bank with a higher rate.
If you have more than $250,000 to save, you can open accounts at multiple banks to stay within the insurance limit at each one. For example, $250,000 at Bank A and $250,000 at Bank B are both fully insured. The FDIC website has a calculator that shows you exactly how much of your money is insured at each bank.
Frequently Asked Questions
Do I have to keep a minimum balance to earn the advertised rate?
Most online banks do not require a minimum balance to earn their advertised rate. However, some require a minimum deposit to open the account—often $0 to $500. Check the bank's website before opening. If a bank requires $1,000 to open but you only have $500, you cannot open an account there.
Can I move my money to a different bank if rates drop?
Yes. You can transfer your money from one bank to another using an ACH transfer, which takes one to three business days and costs nothing. You do not have to close your old account first. Many people keep accounts at multiple banks to compare rates or to stay within FDIC insurance limits.
What's the difference between a savings account and a money market account?
A money market account usually pays a slightly higher rate than a savings account but limits your withdrawals to six per month. A savings account has no withdrawal limit. Both are FDIC-insured. If you need to access your money frequently, a savings account is usually better despite the lower rate.
Should I move my money every time a competitor's rate goes up?
Not necessarily. Moving takes time and effort, and the difference between rates is often small. If your bank's rate is within 0.25% of the highest available rate, staying put is reasonable. If your bank's rate falls more than 0.50% behind competitors, moving becomes worth considering.
Are online banks safe if I've never heard of them?
Yes, as long as they are FDIC-insured. You can check whether a bank is FDIC-insured by searching its name on the FDIC's website. Many online banks are owned by large financial companies—Marcus is owned by Goldman Sachs, Ally was created by General Motors Financial—so they are stable even if you haven't heard of them.