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The idea that you can make your money work for you is pretty attractive, but earning extra cash on top of your nest egg only works if you have the right rates on deck.
Researching average savings account interest rates and what goes into determining the APY for your savings account is essential. From fees and withdrawal limits to why online banks have a significant edge, everything you need to know is just up ahead.
In this guide to savings account interest rates, we’ll delve into these topics:
The average savings account interest rate is 0.46% APY, according to the latest data from the Federal Deposit Insurance Corporation (FDIC).
Many online banks offer interest rates much higher than this national average, with some offering as much as 5% APY. There is even the potential for 7% interest savings accounts, although that rate is not typical for savings accounts at present.
You can see some of the top-rated banks and their savings account interest rates below.
Best high-yield savings accounts for April 2024
| Bank | APY | Monthly fee | Minimum opening deposit | Withdrawal limits |
|---|---|---|---|---|
| LendingClub | 5.00% | $0 | $100 | - From $500 to $250,000, depending on the age of the account and your total balance - No limit on the number of transfers |
| Synchrony | 4.75% | $0 | $0 | - $1,000 per day - No limit on the number of times |
| Ally Bank | 4.25% | $0 | $0 | 10 withdrawals per month |
| American Express | 4.30% | $0 | $0 | - 9 withdrawals per month - To transfer money in and out, you need to link the savings account to a separate checking account |
| Marcus | 4.50% | $0 | $0 | No withdrawal limit |
| Barclays | 4.35% | $0 | $0 | - Withdrawal limit of $250,000 per transaction - No limit on the number of times |
| Capital One | 4.25% | $0 | $0 | No withdrawal limit |
| Citibank | 4.45% | $4.50 | $0 | No withdrawal limit |
| PNC | 4.65% | $0 | $0 | Monthly withdrawal cap of 6 transactions |
The average interest rate can shift significantly in just a matter of months — from November 2023 to February 2024, the average rate rose by 60% from 0.33% APY to 0.46% APY.
Let’s take a look at historical patterns for interest rates to help you understand how rates fluctuate and what circumstances could affect how much your nest egg earns.
Interest hit a historic high point in the 1980s when savings account rates peaked at a whopping 8%. Those rates were unsustainable, resulting in APY plummeting in the 90s to the 4% to 5% rates we’re more familiar with now.
We then saw a middle ground in the 2000s, with average rates closer to 1% to 2%.
In 2008, a huge economic downturn led to some of the biggest financial instability since the Great Depression. The U.S. Federal Reserve slashed interest rates to encourage borrowing and boost economic activity, and savings account interest rates dipped as low as 0.25%.
Interest rates steadily continued to decrease during the years that followed until they bottomed out at a mere 0.06% APY in 2013, maintaining this level through 2017.
Interest rates then began to rise in 2018 with economic improvements, but the COVID-19 pandemic caused a brief recession and rates were pushed back down. By 2021, the average savings account interest rate had fallen to 0.05%.
In 2022, the Federal Reserve started raising rates due to high inflation. Rates then experienced a significant period of growth until reaching the current average savings account rate of 0.47%.
To calculate the average savings account interest rate, we use data from the Federal Deposit Insurance Corporation (FDIC). This government agency monitors savings account interest rates across the country and updates their data each month.
This agency also provides insurance for the money you deposit in a bank to safeguard it in case the bank shuts down.
Interest rates ebb and flow along with connected factors that heavily influence how much you’ll get (or, in the cases of other assets, like loans and mortgages, how much you’ll pay).
The Federal Reserve affects the average interest rate for savings accounts by raising rates when the economy is artificially inflated and lowering rates to bring a sluggish economy back to life. This helps stabilize financial markets in the United States and catalyze consumers into buying, saving or some combination of the two.
The Federal Reserve is the central bank for the United States. As such, it has the power to set the country’s benchmark interest rate. All other banks then respond by aligning their in-house savings account interest rates accordingly. It’s kind of like a game of follow the leader — the Fed bumps up the benchmark interest rate for savings accounts, and banks raise their own rates to keep a level playing field.
Banks are always fighting for customers, hence all the ads we see touting tempting welcome bonuses and promises of fee-free deposits and withdrawals. Interest rates are another dangling carrot. One bank doesn’t want to be the only institution on the market with interest rates far below the national average. So, if the Fed raises rates, many banks will toe the line and raise their rates as well to stay competitive.
Some banks may even go above and beyond, with interest rates well above those advertised by the competition. This tends to happen more with online-only banks that offer low or no-fee accounts with sky-high interest. Their lack of overhead (no brick-and-mortar locations, for starters) gives them better margins and more wiggle room.
Understanding the average interest on savings accounts and what interest rate is “good” might involve two separate (but linked) discussions. The average interest rate in the United States, per the FDIC, is 0.46%. But that’s far below what experts believe to be a solid, favorable rate.
Truthfully, you have to look at interest rates through two lenses:
So, a “good” interest rate seems to be one over 4% APY, but only if you’re comfortable with online banking. If you prefer to bank in person and visit physical branches to manage your account or speak with a customer service agent, you may have to settle for a less-than-stellar interest rate in exchange.
To get the best savings account interest rate for your needs, consider the following:
Get to know average savings account interest rates and what’s considered favorable for your preferred account type and area.
These banks usually have more favorable interest rates.
A big interest rate with lots of fees is not as attractive as a slightly lower interest rate with no fees.
Tiered rates assign higher APY to higher balances, meaning you could lose out if your balance dips below tip-tier amounts.
Read the fine print to make sure your high-yield rate won’t disappear after the promotional period expires.
If you can’t find a savings account that ticks all your boxes, some alternatives can help you save money and maximize your ROI.
You may want to check out these other options:
According to the FDIC, the average interest rate on savings accounts as of February 2024 was 0.46% APY. You may be able to get a higher interest rate, however, by doing some research. With online savings accounts, typical interest rates tend to be higher, sometimes exceeding 5% APY. With traditional savings accounts, typically interest rates will be lower, with an average interest rate of 1% APY considered high.
If you’re looking to open a savings account, average interest rates that meet or exceed 4% APY are considered a good deal. That’s well above the national average saving account interest rate of 0.46% APY, but it’s possible to find if you know where to look. To score high interest rates, you may need to search beyond brick-and-mortar banks and consider online-only banks.
As of April 2024, there are no banks in the United States offering an interest rate of 7% APY. Higher-than-normal savings account interest rates are more common with online-only banks, which don’t have the same overhead and expenses as a traditional bank. Even so, high-yield savings accounts with those online banks still rarely exceed 5% APY. Anything over that mark would be considered quite good. Learn more about the pros and cons of high-yield savings accounts to see if you should consider getting one.
The amount you’ll earn in interest with $10,000 in a savings account depends on your interest rate and type. With a high-yield interest rate that compounds monthly, your $10,000 initial deposit could grow to $10,407.42 in one year. That’s far more than you’d get with the average interest rate of 0.46%, which would yield just $46.10 (for a total of $10,046.10) after the same one-year period.
To learn more about how much you could earn, try using our savings calculator.
Alana Luna (Musselman) is a versatile storyteller with over a decade of writing experience. She is passionate about helping people build their business through unique and engaging content. Some examples of her current freelance projects include building content strategies for small businesses, completing industry research to build case studies, crafting buyer guides and more.
She has a passion and keen ability to simplify complex ideas through storytelling to make it easier for readers to understand hard-to-digest information. As such, Alana’s writing holds strong three principles – content that educates, engages and entertains.
Apart from her contributions to LA Times Compare, Alana has freelanced and ghostwritten for large publications and prestigious brands such as Orbitz, Groupon, Amazon, JCPenney, Walmart and more.
