Learn how to find the average savings account interest rate, how that differs from the highest rates and what factors impact your balance earnings
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*Annual Percentage Yield
**Accurate as of June 2024, assuming FDIC average savings rate of 0.45% and $2,500 deposit.
What Are Average Savings Account Interest Rates?
The average savings account interest rate in the U.S. is published monthly by the FDIC. The data is broken into four types of deposit accounts:
- Traditional savings accounts
- Money market accounts
- Interest-bearing checking accounts
- Certificates of deposit (CDs) ranging from one month to five years
This makes it easy to comparison shop when you’re looking for higher interest rates.
How Average Savings Account Interest Rates Are Calculated
Banks and credit unions offer a range of interest rates even within regular savings accounts. With some types of savings accounts, higher balances come with higher interest rates. The FDIC sources national average rates from S&P Global, a financial research and analytics firm.
To calculate the national averages for savings and interest-bearing checking accounts, the FDIC looks at accounts in the $2,500 tier. The rates for CDs and money market accounts are based on averages of the $10,000 and $100,000 tiers.
APR vs. APY in Savings Accounts
During your search for high interest rates, understand the terminology used by banks and credit unions. You’ll frequently see APR and APY used on banking products. While they look similar, they’re two different terms.
Annual Percentage Rate
The APR is the amount of interest you pay on a loan or credit card. In addition to the annual interest rate, it factors in lender fees that impact the total cost of financing. The higher the APR, the more you’ll pay in interest and fees.
Annual Percentage Yield
The APY is the amount of interest you earn on a bank account. The higher the APY, the more your account balance grows over time. Instead of just referring to a flat interest rate, APY also includes compound interest. That means it takes into account the interest earned on the interest that has already accrued in the account.
Savings account interest may compound daily, monthly, quarterly, semiannually or annually, which impacts your APY. The more often interest is compounded, the more you earn.
>> Related: Learn more about annual percentage yield
Factors That Affect Average Savings Account Interest Rates
The average savings account interest rate varies significantly depending on many different factors. The overall economy, the Federal Reserve and competition among banks are all driving forces behind how much your account can earn.
Economic Conditions
When inflation increases, it costs more to make purchases, which lowers the value of money. When inflation is low, interest rates (for both saving and borrowing) are usually low, too. But when inflation begins to rise, interest rates also start to creep up.
But this doesn’t happen automatically. Banks raise rates in response to central bank policies. In the U.S., the Federal Reserve is the central bank.
Federal Reserve Policies
One of the Federal Reserve’s main jobs is to keep inflation in check. Its target inflation rate is 2%, which is meant to reflect stable employment and prices. When the inflation rate gets too high, the Fed works to increase interest rates.
The Fed doesn’t have direct control over the savings account interest rates offered by banks and credit unions. Instead, it adjusts the federal funds rate. That’s the rate at which financial institutions lend to each other overnight. When it costs more for banks to borrow money, they increase lending rates for their consumer loans and credit cards. But they also increase savings rates to increase their deposits and customer base.
Competition Among Financial Institutions
The average savings account interest rate is also impacted by competition among banks. The number of online banks is increasing, and they often offer some of the highest interest rates because they have lower operating costs than brick-and-mortar banks. This puts more pressure on traditional banks to offer competitive rates, ultimately benefitting savers.
>> Related: Learn more about the best online banks
Where To Find the Latest Rates
Whether you’re putting money away for a short-term savings goal or need somewhere to park your emergency fund, it’s important to get a sense of current rates to use as benchmarks in your search for the best rates available.
The monthly national rates and rate caps report from the FDIC is a great starting point. As of April 2024, the national average savings account interest rate was 0.45% APY.
You can find better interest rates with a high-yield savings account. As of April 2024, many of the best high-yield savings accounts offer rates at 5% APY or higher.
Optimizing Savings in Light of Rate Fluctuations
As savings interest rates change over time, there are a few things you can do to make sure you’re making the most out of your deposit accounts. Use these practical tips to optimize your savings.
Check Your Current Savings Rates
The first step is to find out how much interest the savings accounts you have are earning. You can get this information by logging into your account and locating the account details. If you have more than one savings account, do this task for each one to get an overall sense of your personal finances.
Search for a Higher Savings Account Interest Rate
Next, compare your current savings rate (or rates) to other options. Check the national average rate first, and then move on to finding the best rates on high-yield savings accounts.
During your search, focus on reputable financial institutions. Make sure they’re FDIC-insured so your funds are protected in case something happens to the bank. If you’re considering a credit union, the account should be insured by the National Credit Union Administration, or NCUA, which is similar to the FDIC.
Consider any New Account Requirements
When you’re comparing new savings accounts, look at the terms and conditions, as well as the APY. Find an account that earns a solid APY and has requirements that are easy to meet.
Avoid monthly maintenance fees that are likely to chip away at your earnings. Also check for minimum balance requirements. There may be a minimum deposit necessary to open the account, or you may need to maintain a certain daily balance to avoid a fee.
>> Related: Learn more about the best savings accounts
The Bottom Line on Today’s Savings Account Interest Rates
The APYs offered at banks and credit unions vary from the average savings account interest rate, often by a lot. On top of that, your current savings account rate may change at any time. Periodically check your rate and compare it to other available rates on our savings calculator. By maximizing your earned interest, you’ll reach your financial goals as quickly as possible.
>> Related: Use our savings calculator to decide what rate is best for you
FAQ: Savings Account Interest Rates Today
As of April 2024, you can find banks and credit unions offering online savings accounts with a 4.5% APY or higher. Some even go above 5% APY. That’s much higher compared to the national average of 0.45% APY.
You can also find CD rates in this higher range, but you’ll need to leave your funds in the account until the end of the term to avoid an early withdrawal penalty.
The interest you’ll earn on $10,000 in one year depends on the savings account’s APY and how frequently interest is compounded. Let’s look at two hypothetical examples of interest earnings. We’ll assume both accounts compound interest monthly. The first has a 0.45% APY, and the second has a 5% APY.
The account with the 0.45% APY only earns about $45 on a $10,000 deposit in one year, but the account with the 5% APY earns about $500.
It’s rare to find a savings account offering a 7% APY. Even those in the 6% APY range typically have restrictions that make it difficult to maximize any substantial savings. For instance, some regional credit unions may have membership requirements that limit eligibility. And some financial institutions may offer high interest rates for a limited time or only on low balances.
*Data accurate at time of publication
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
If you have feedback or questions about this article, please email the MarketWatch Guides team ateditors@marketwatchguides.com.
Lauren WardContributor
Lauren Ward is a personal finance writer covering topics like banking, real estate and financial services. Her work has appeared in USA Today Blueprint, Fox Business and more.
Rashawn MitchnerManaging Editor
Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance and insurance topics.
