Between March 2022 and July 2023, the Federal Reserve raised its benchmark interest rate 11 times. As a result, savings rates skyrocketed. The Federal Reserve has since paused further rate hikes, but savings rates have remained stable. So, if you're looking for the best interest rates available right now, here's where to find them.
How today's savings rates compare to the national average
Though savings rates are historically high, the national average interest rate on savings accounts is still just 0.45%, according to the FDIC. The good news is that the top high-yield savings accounts offer annual interest rates of 5% or more, which is more than 11 times the national average.
That's why it's important to shop around before opening a savings account. Interest rates vary widely, but there are several banks (especially online banks) and credit unions that offer very competitive offers.
Below are some of the best discount rates currently available, offered by our certified partners.
Related: 10 Best High Yield Savings Accounts>>
Which online bank has the best savings account interest rate?
Online banks operate exclusively on the web. This allows them to significantly reduce their expenses and pass on those savings to their customers in the form of higher savings interest rates and lower fees. In fact, many of the best high-yield savings accounts don't charge any monthly fees or require minimum opening deposits. If you're looking for the best savings interest rates, online banks are a great place to start.
However, online banks aren't the only places where you can find savings accounts with 4% to 5% annual interest. Credit unions are nonprofit financial cooperatives that are also known for offering competitive interest rates and low fees. Many credit unions have specific requirements you must meet to become a member, but some are open to almost anyone.
Read more: Is online banking really safe?
Should I open a savings account?
A savings account is one of the safest places to put your money: Savings accounts are insured by the FDIC (or NCUA for credit unions), so your deposits are protected up to $250,000 if an institution fails. They also ensure your money won't be lost due to market fluctuations.
But savings accounts aren't always the right choice. Although savings interest rates today are high by historical standards, they still won't provide the same returns you'd get if you invested in the market. For long-term savings goals like retirement, you'll need to invest the majority of your savings in higher-risk (but higher-return) market investments like stocks, index funds, and mutual funds to reach your goal.
But if you're saving for short-term goals like a down payment on a home, a vacation, or an emergency fund, a high-yield savings account is one of the best options. This is especially true if you want to have access to your money when you need it. Other types of high-yield savings accounts, like money market accounts and certificates of deposit (CDs), have more limitations on how often you can make withdrawals.