The banks and credit unions offering the best rates change every week
There is no single "best" savings rate because rates shift constantly and depend on what type of account you open. High-yield savings accounts at online banks currently offer rates between 4% and 5.35% annual percentage yield (APY), while traditional brick-and-mortar banks often pay 0.01% to 0.5%. Credit unions sometimes match online bank rates, but not always. The rate you actually receive also depends on your account balance, how long you commit your money, and which bank you choose.
The fastest way to compare current rates is to check aggregator sites like Bankrate, DepositAccounts, or NerdWallet, which update daily. These sites list rates from dozens of banks side by side so you can see what is available today. You can also visit individual bank websites directly, though this takes longer if you are comparing more than three or four options.
Key Takeaways
- Online banks typically offer the highest savings rates because they have lower operating costs than physical branches.
- The rate you see advertised is only may provide for new deposits made during the promotional period, and rates can drop without notice.
- High-yield savings accounts have no lock-in period, so you can move your money if a better rate appears elsewhere.
- Credit unions sometimes offer competitive rates, but you must be a member, which may require living or working in a specific area or paying a membership fee.
- Money market accounts and certificates of deposit (CDs) may offer higher rates than savings accounts, but they come with restrictions on how often you can withdraw.
Why online banks pay more than traditional banks
Online banks have no physical locations, so they spend far less on rent, staff, and equipment. They pass those savings to customers by offering higher interest rates on deposits. A bank like Marcus, Ally, or American Express Personal Savings can afford to pay 4.5% APY because it operates from a few data centers instead of hundreds of branches.
Traditional banks—the ones with storefronts on your street—use deposit interest as a loss leader. They make money from loans and investment products, not from paying you interest. So they offer minimal rates on savings accounts, knowing most customers will not shop around.
Credit unions occupy a middle ground. They are nonprofit organizations owned by their members, so they can offer rates closer to online banks. However, not all credit unions pay competitive rates, and membership requirements vary. Some require you to live in a specific county, work for a particular employer, or belong to an organization like a military branch or professional association.
How to compare rates across account types
Savings accounts, money market accounts, and certificates of deposit all earn interest, but the structure differs. A high-yield savings account lets you withdraw money anytime without penalty, but the rate is variable—the bank can lower it whenever rates fall. A money market account works similarly but may require a higher minimum balance and limit the number of withdrawals per month. A certificate of deposit (CD) locks your money away for a set term (three months to five years) in exchange for a higher may provide rate, but you pay a penalty if you withdraw early.
If you need access to your money within the next year or two, a high-yield savings account makes sense even if the rate is slightly lower than a CD. If you have money you will not touch for two years or more, a CD often pays 0.5% to 1% more because the bank knows it can invest your deposit for a longer period.
Use a rate comparison table to see what each bank offers for each account type. Most aggregator sites let you filter by account type, so you can compare only savings accounts, or only CDs, or only money market accounts.
What to watch for when choosing a bank
The advertised rate is not a promise—it is a current offer. Banks can lower rates at any time, and many do when the Federal Reserve cuts its benchmark rate. Read the fine print to see whether the rate applies to your entire balance or only to balances above a certain threshold. Some banks pay 4.5% on the first $25,000 and 1% on anything above that.
Check whether the bank is FDIC-insured (for banks) or NCUA-insured (for credit unions). This insurance protects your deposits up to $250,000 per account type per institution if the bank fails. Nearly all online banks and credit unions carry this insurance, but it is worth confirming before you move money.
Look at the minimum balance requirement. Some banks require $0 to open an account; others require $500 or $1,000. If you cannot meet the minimum, you may not earn the advertised rate, or you may not be able to open the account at all. Also check whether there are monthly fees—most online banks charge nothing, but some traditional banks charge $5 to $15 per month if your balance drops below a threshold.
How rates change and when to move your money
Savings rates are tied to the Federal Reserve's benchmark interest rate. When the Fed raises rates, banks gradually raise the rates they pay on deposits. When the Fed cuts rates, banks cut deposit rates quickly—sometimes within days. This means the "best" rate today may not be the best rate in three months.
You do not have to stay with one bank forever. If you opened a savings account at Bank A when it paid 4.8% and Bank B now pays 5.2%, you can move your money to Bank B. The transfer usually takes three to five business days and involves no penalty. Some people move money every few months to chase the highest rate; others stay put and accept a slightly lower rate for the convenience of not switching.
Set a reminder to check rates every three to six months. If your current bank drops its rate by more than 0.5% and competitors are paying significantly more, moving your money takes less than an hour and can earn you hundreds of dollars per year on a large balance.
Regional credit unions and local banks worth checking
National online banks dominate the high-rate market, but some regional credit unions and smaller banks offer competitive rates to attract deposits. If you are a member of a credit union or have a relationship with a local bank, ask what they currently pay on savings accounts. You may find they match or come close to online bank rates.
Credit union rates vary widely. Some pay 4% or higher; others pay less than 1%. The only way to know is to call or visit their website. If you are not yet a member, check the membership requirements first—some credit unions are open to anyone in a geographic area, while others require employment at a specific company or membership in a professional organization.
Frequently Asked Questions
Can the bank lower my interest rate after I open an account?
Yes. Rates on savings accounts and money market accounts are variable, meaning the bank can change them at any time without notice. Rates on CDs are fixed for the term you choose, so a bank cannot lower your rate on a three-year CD once you have funded it. However, the bank can lower the rate it offers to new CD customers.
Is my money safe in an online bank?
Yes, as long as the bank is FDIC-insured. FDIC insurance protects deposits up to $250,000 per account type per bank, regardless of whether the bank has physical branches. Online banks are regulated by the same federal agencies as traditional banks and must meet the same safety standards.
What is the difference between APY and interest rate?
APY (annual percentage yield) includes the effect of compounding—how often the bank adds interest to your account. A bank might advertise an interest rate of 4.8% compounded daily, which results in an APY of 4.92%. Always compare APY, not the stated interest rate, because APY shows what you will actually earn.
Should I put all my money in a CD to get the highest rate?
Only if you will not need the money before the CD matures. If you withdraw early, you pay a penalty that can wipe out months of interest. If you might need the money within a year, a high-yield savings account is safer because you can withdraw anytime without penalty.
Do I need to have a lot of money to earn a good rate?
No. Most online banks pay the same rate on all balances, whether you have $100 or $100,000. A few banks tiered rates based on balance, but this is less common. Check the bank's terms to see whether your balance affects the rate you earn.