Savings account rates have remained mostly stable this week, although savers can now earn much higher returns than at the same time last year. Although you should prioritize rates when choosing a savings account, be sure to also check account fees, customer service, and whether you can easily bank online.
Savings accounts, particularly those at traditional brick-and-mortar banks, offered microscopic returns after the Great Recession when the Fed cut short-term rates to near zero and kept them there for years in order to speed the economy’s recovery. economy.
This status quo was upended after massive federal government spending during the pandemic, which helped push inflation to levels not seen in decades. The Fed responded to the economic effects of lockdowns and rounds of stimulus measures by raising interest rates to offset soaring inflation, prompting banks to raise rates for savers.
Savings account rates: Minimum deposit of $2,500
The highest interest rate on a standard savings account today is 4.26%, according to Curinos, down from a week ago. Meanwhile, the average APY (annual percentage yield) for a traditional savings account, as reported by Curinos, is 0.22%, the same as last week.
The APY represents the return your account will generate in a year, taking into account compound interest, which is the interest earned on both the principal and interest previously accumulated in your account.
For example, if you were to invest $2,500 at a rate of 4.26% (the current high) for one year, you would earn about $110 in interest, assuming daily compounding and no additional contributions.
Savings account rates: Minimum deposit of $10,000
The average APY for savings accounts requiring a $10,000 minimum deposit is 0.23%, one level higher than last week. But remember that many banks offer significantly higher rates.
Some of the best high-yield savings accounts, for example, currently have rates of 4.00% or higher.
According to Curinos, the highest interest rate today on a savings account requiring a minimum deposit of $10,000 is 4.51%. If you were to invest $10,000 at a rate of 4.51% (the current high) for one year, you would earn more than $460 in interest, assuming daily compounding and no additional contributions.
Methodology
To establish average savings account rates, Curinos focused on savings accounts intended for personal use. Savings accounts that fall into specific categories, including promotional offers, relationship, private, youth, senior and student/minor accounts are excluded. The average savings rates above are based on a minimum deposit amount of $2,500 or $10,000.
Frequently Asked Questions (FAQ)
A high-yield savings account is essentially a standard savings account that offers a higher interest rate on deposits. (It’s more of a description than a technical definition.) This rate may vary based on the broader financial market and the specific business requirements of the bank or credit union.
Like most savings accounts, you can’t access your funds by writing checks, and your withdrawals are generally limited.