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Rates on a variety of savings accounts are rising as the Federal Reserve raises interest rates. Are you looking for an account where you can park money? Here’s a rundown of the best savings rates you’ll find today.
Related: Compare the Best High Yield Savings Accounts
Savings Rate Today: Traditional Savings Account
Traditional savings accounts, known as “statement savings accounts” in the banking industry, are infamous for paying paltry interest in recent years. This is gradually changing, thanks to the Fed.
Today’s highest interest rate on a standard savings account is 2.19%, according to data from Bankrate.com. If you get a basic savings account with a rate in this range, you’ve found a good deal. A week ago, the best rate was also 2.19%.
The national average rate is just 0.13%, according to the most recent data from the FDIC, the government agency that insures bank deposits. But today’s average APY for a traditional savings account is 0.60%, according to Bankrate, and that’s up from 0.59% a week ago.
APY, or Annual Percentage Rate, indicates the actual return your account will earn for a year. It takes into account compound interest, which is the interest that accumulates on the interest in your account.
Savings Rate Today: High Yield Savings Account
High yield savings accounts generally earn significantly higher interest than a conventional savings account. But the catch is that you’ll have to jump through a few hoops for the bank or credit union. Often this means making a large deposit to open the account.
On high yield accounts requiring a minimum deposit of $10,000, the current best interest rate is 2.00%. It’s been unchanged for a week.
The average APY for these accounts is now 0.13% APY, down from 0.12% a week ago.
For a high yield account with a minimum deposit of $25,000, the current average is 0.29% APY. This is above last week’s 0.24%.
Savings Rate Today: Money Market Account (MMA)
Money market accounts are savings accounts that offer some of the benefits of checking accounts. Generally, you can write checks and take advantage of debit card privileges.
MMAs tend to pay at least slightly higher interest than a standard savings account. The FDIC says the average MMA rate is 0.14%, compared to 0.13% for a traditional savings account.
But today, the best money market accounts have rates as high as 1.73%. It is stable with the maximum rate of 1.73% from a week ago.
The average APY for an MMA is now 0.16%, down from 0.15% this time last week, according to Bankrate.
How to buy a savings account
To find the best savings account for your needs, you must first answer the question: what exactly are you looking for?
An account where you can do your banking in person, in branch? This would exclude online banks only. An account that allows easy withdrawals? This could exclude any account that limits your monthly transactions. An account that pays decent interest? That would rule out a traditional savings account at one of the big banks, as you’ll likely only earn 0.01% or 0.02% APY.
Don’t choose any options until you’re sure you have a good idea of the fees you’ll be charged. Savings accounts can charge you monthly service fees, excess withdrawal fees, and fees for returned items (if you deposit bounced checks), among other things. These fees add up and can eat into your savings.
When shopping, check the reviews and ratings of financial institutions and be sure to choose one that will protect your money with federal insurance – from the FDIC or, in the case of credit unions, the NCUA.
How often do savings account interest rates change?
Interest rates on savings accounts are generally variable, meaning they can go up or down as other rates change throughout the economy. Savings rates are often influenced by Federal Reserve rate movements, and the central bank has raised its benchmark federal funds rate in recent months in an attempt to keep inflation under control.
But while financial institutions are generally quick to raise credit card rates and other borrowing costs when the Fed raises rates, they tend to take their time increasing the interest paid to savers. Rates on savings accounts have been rising slowly, and this is expected to continue through 2022 and into 2023 as the Fed remains active.