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Rates across the range of savings accounts are mixed compared to a week ago, with the Federal Reserve raising interest rates. Are you looking for an account where you can save money? Here’s a rundown of the best savings rates you’ll find today.
Savings Rate Today: Traditional Savings Account
Traditional savings accounts, known as “statement savings accounts” in the banking industry, have been known to pay minimal interest in recent years. This is slowly changing, thanks to the Fed’s campaign to hike interest rates to fight inflation.
Today’s highest interest rate on a standard savings account is 3.11%, according to data from Bankrate.com. If you get a basic savings account with a rate in this general area, you’ve found a good deal. A week ago, the best rate was also 3.11%.
The national average rate is just 0.21%, 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 0.61%, according to Bankrate, and that’s the same as a week ago.
APY, or Annual Percentage Rate, represents 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 will have to meet strict requirements set by 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 2.96%. It’s been unchanged for a week.
The average APY for these accounts is now 0.17% APY, the same as a week ago.
The current average is 0.39% APY for a high yield account with a minimum deposit of $25,000. This is the same as last week’s APY.
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 slightly higher interest than a standard savings account. The FDIC says the average MMA rate is 0.23%, compared to 0.21% for a traditional savings account.
But today, the best money market accounts have rates as high as 2.66%. This is above the peak rate of 2.47% from a week ago.
The average APY for an MMA is now 0.25%, down from 0.24% this time last week, according to Bankrate.
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.