Key Takeaways
Today's top savings accounts can earn you up to 5.45% APY. With inflation showing signs of subsiding, experts expect the Fed to start lowering interest rates in the coming months. When the Fed cuts interest rates, savings rates also fall. So now is the time to take advantage of a high APY.
If you're looking to maximize your savings (and we all are), now's the time to open a high-yield savings account. Savings interest rates have been high for the past couple of years, but experts predict that the Federal Reserve could start cutting interest rates as soon as September, which would bring savings account interest rates down.
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“There's never a bad time for investors to get higher yields, but those considering insured high-yield savings accounts should be aware that as the Fed cuts interest rates, [rates] “Yields on investments like high-yield savings accounts and money market funds will fall in roughly lockstep,” said Ed Mahaffey, president and senior portfolio manager at ClientFirst Wealth Management.
The most popular high-yield savings accounts today boast annual percentage yields (APY) of up to 5.45%, more than 10 times the national average, but rates have likely peaked, so the sooner you open one of these accounts, the more interest you could earn.
Experts recommend comparing interest rates before opening a savings account to get the best possible APY. Enter your information below to see interest rates from CNET partners in your area.
Best Savings Interest Rates Today
Here are some of the best savings account APYs currently available.
BanksAPYMinimum deposit required to openMy Banking Direct5.45%$500TAB Bank5.27%$0Newtek Bank5.25%$0UFB Direct5.25%$0Synchrony Bank4.75%$0Capital One4.25%$0Discover Bank4.25%$0Ally Bank4.20%$0APYs are as of July 12, 2024, based on banks tracked by CNET.
Why savings rates change
While the Fed does not directly influence savings rates, its decisions have ripple effects on everyday consumers.
When the Federal Reserve raises the federal funds rate — the rate at which US banks can borrow and lend money to each other overnight — banks tend to raise interest rates on savings accounts. Conversely, when the Fed cuts rates, banks cut savings rates.
Keep in mind that savings interest rates are variable, so banks can change the interest rate on your savings account at any time.
Where are savings rates headed in the future?
Since March 2022, the Fed has raised interest rates 11 times to combat record inflation. However, as inflation began to show signs of subsiding in late 2023, the Fed has opted to maintain its target range at 5.25% to 5.5% for the past seven Federal Open Market Committee meetings. As a result, savings rates have remained attractive and largely unchanged as banks await the Fed's next move. When My Banking Direct lowered the APY on its high-yield savings accounts from 5.55% to 5.45% on July 12, it was the first change we've seen in accounts we track since May 31.
Experts expect interest rates to fall by the end of the year, meaning savings rates are likely to fall as well. Some expect rates to fall as soon as July, but others think it's hard to say interest rates will fall that quickly.
“We expect the Fed to start cutting rates at its September meeting,” said Justin Heywood, president and co-founder of Heywood Wealth Management and a certified financial planner. “If the labor market continues to cool, we could see two rate cuts by the end of the year. Recent employment reports support the view that economic conditions are cooling, which could bolster expectations for a September rate cut. Several Fed officials have already hinted at the possibility of a rate cut in 2024, and the majority support two rate cuts this year if current economic trends continue.”
Here's how rates compare to last week, based on CNET's weekly tracking.
CNET Average Annual Savings Rate
Weekly Changes*
FDIC Average 4.87% Unchanged 0.45% APY as of 7/12/2024, based on banks tracked by CNET.
*Weekly increase/decrease percentage from 07/01/2024 to 07/08/2024.
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What are the benefits of opening a high-yield savings account today?
High-yield savings accounts offer a low-risk way to grow your savings while taking advantage of compound interest, which not only earns interest on your initial deposit, but also earns interest on that interest, helping your money grow faster.
Other great things about HYSA include:
High interest rates: As tracked by the Federal Deposit Insurance Corporation, HYSAs often have APYs that are 10 times (or more) higher than the national average. Low or no fees: Monthly maintenance fees can eat into your savings. Many online banks have low or no fees because of their low operating costs. Liquid: You can access the money in your HYSA at any time without penalty (as long as you keep an eye on withdrawal limits). Accessibility: If you open a HYSA with an online bank, you can access it 24/7 through their mobile app. Many customer service options may also be available, including phone, online chat, and secure messaging. Low risk: HYSAs are protected by Federal Deposit Insurance if they are held at an FDIC-insured bank or a credit union insured by the National Credit Union Administration. This means your money is safe up to $250,000 per account holder, per account type.
What to look for in a savings account
While a high APY is important, you should consider more than just the APY before opening a high-yield savings account.
“Some accounts may have minimum deposits, transaction fees, or unexpected fees,” says Ben McLaughlin, chief marketing officer and president of digital savings marketplace Raisin. “These hidden fees can chip away at your savings, so make sure you're comfortable with the terms and conditions before opening an account.”
To find an account that fits your financial goals, consider the following:
Minimum deposit requirements: Some HYSAs require a minimum amount to open an account (usually $25-100). Others don't require anything. ATM access: Not all banks offer cash deposits and withdrawals. If you need to use ATMs regularly, see if your bank offers ATM fee rebates or a wide selection of in-network ATMs. Fees: Beware of monthly maintenance fees, withdrawals, and paper statement fees. These fees can eat into your balance. Accessibility: If you prefer in-person help, look for a bank with a brick-and-mortar location. If you're comfortable managing your money digitally, consider an online bank. Withdrawal limits: Some banks charge an over-withdrawal fee if you make more than six withdrawals per month. If you think you might need to withdraw more than that, consider a bank that doesn't have this limit. Federal deposit insurance: Make sure the bank or credit union is FDIC or NCUA insured. This protects up to $250,000 per account holder, per category, in the event of a bank failure. Customer service: Choose a bank that is responsive and easy to get help with your account if needed. Read online customer reviews and contact the bank's customer service to get a feel for interacting with the bank.
methodology
CNET reviewed savings accounts from more than 50 traditional and online banks, credit unions and financial institutions that offer nationwide service. Each account was given a score from 1 (lowest) to 5 (highest). All savings accounts listed here are insured by the FDIC or NCUA up to $250,000 per person, per account category and per institution.
CNET rates the best savings accounts using a set of established criteria that compare annual percentage yields, monthly fees, minimum deposits or balances, and access to brick-and-mortar locations. None of the banks on our list charge monthly maintenance fees. Accounts rank higher if they offer any of the following perks:
Account bonuses, automatic savings features, wealth management consulting/coaching services, cash deposits, extensive ATM network and/or ATM rebates when using out-of-network ATMs
A savings account may be rated lower if it doesn't have an easy-to-navigate website or doesn't offer convenient features like an ATM card. Accounts with strict residency requirements or fees for exceeding monthly transaction limits may also be rated lower.
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