High-yield savings accounts from online banks are one of the best options for earning a great interest rate. Getty Images/iStockphoto
It's wise to start putting money aside now for expenses you may face in the future. After all, you never know when a financial emergency will strike, and when it does, you'll probably need a financial safety net to fall back on.
“A lot of things happen,” says William Thompson, CFP and financial planner at Valor Wealth Partners, LLC. “You lose your job, you need to replace an appliance, your car breaks down, etc. — you need funds you can quickly draw on to deal with these issues without having to use high-interest credit cards.”
If you're looking for a safe place to store your emergency fund, savings accounts are a great option. Not only are these accounts safe, but they also earn interest, which can help your savings grow and prepare you for your next emergency.
However, how much interest you earn will depend on current savings rates.
What is the savings interest rate today?
According to the most recent data from the FDIC, as of June 28, 2024, the national average savings account interest rate is 0.45%. However, you can make exponentially more than that by opening a high-yield savings account. Bankrate reports that the top high-yield savings account interest rates in June 2023 are between 4.25% and 5.25%. If you shop around, you may find an account offering an even higher interest rate.
Check out today's rates here and find the account that will give you the most return.
How to get good savings interest rates
Here's how to secure the best interest rate available on your savings balance today.
Choose a high-yield savings account
When it comes to earning as much interest as possible, high-yield savings accounts are the clear winners: High-yield savings accounts can offer interest rates up to 11 times higher than regular savings accounts, and that sum can add up quickly.
For example, say you put $1,000 in a savings account with an interest rate of 0.25%. After 12 months, you'll only earn $2.50 in interest. But if you put that money in a high-yield account with an interest rate of 4.85%, you'll earn $48.49 in interest over the same period. And because interest compounds, this difference can compound over time.
To get started, check out today's best savings account interest rates here.
View Online Banking
Many of the most popular high-yield savings accounts today are offered by online banks. Because these banks don't have physical locations, they incur lower overhead costs than brick-and-mortar banks. These banks pass those savings on to you by offering perks like higher interest rates and low or no fees.
“For those who feel they don't have enough savings, many top-tier accounts typically start at a minimum of $1, so it's not too much of a hurdle. And they often don't have monthly fees, so even if you're only looking to save less than $100 per month in an online savings account, it shouldn't be a big obstacle,” says Shane Cummings, CFP, CEPA, AIF, wealth advisor and director of technology/cybersecurity at Hulbert Hargrove.
Plus, the online account is easy to set up and easy to use.
“Most account opening procedures are [these] “Banking has also become so streamlined that it can be completed online in minutes, which is far better than having to go into a bank branch and do a lengthy face-to-face transaction,” Cummings says.
Compare different accounts
High-yield savings accounts offered by online banks are your best bet for getting a high interest rate, but these options come in a wide variety, so take the time to compare offers and pay attention not only to interest rates but also to other aspects like fees that can eat into your earnings.
It will take more time than choosing the first account you find, but once you've done your initial research, you can watch your savings grow with peace of mind, knowing you're making the most of your money.
Compare your options online today to find the high-yield account that's right for you.
Conclusion
No matter where you are in your financial journey, a savings account is a must. Not only is it a smart financial move, you owe it to yourself to get the best interest rate possible and maximize your savings. It starts with finding out what the average interest rates are today, choosing a high-yield savings account with an online bank, and researching your options. By doing this, you'll have peace of mind knowing you'll be better prepared to make the most of the money you've saved and better able to weather any storms that may come your way.