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Rates on a variety of savings accounts are the same as they were a week ago as the Federal Reserve raises interest rates. Are you looking for an account where you can save for a rainy day or for your retirement? 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, have been known to pay paltry interest in recent years. That is changing, thanks to the Fed’s campaign to raise interest rates to fight inflation.
Today’s highest interest rate on a standard savings account is 2.61%, according to data from Bankrate.com. If you score a basic savings account with a rate in this range, you’ve found a good deal. A week ago, the best rate was 2.18%.
The national average rate is just 0.13%, according to the most recent data from the FDIC, the government agency that insures bank deposits. Today’s average APY for a traditional savings account is 0.59%, according to Bankrate.
APY, or Annual Percentage Rate, reflects 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 often earn considerably higher interest than a conventional savings account. But the thing to know 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 best interest rate over the past week has been 2.47%.
The average APY for these accounts is now 0.13% APY, the same as a week ago.
The current average is 0.28% 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 have some debit card privileges.
MMAs tend to pay 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 2.03%. This is above the peak rate of 1.83% from a week ago.
The average APY for an MMA is now 0.16%, the same as this time last week, according to Bankrate.
How to choose 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.