In the past, interest rates for savings accounts have been low, but the Federal Reserve’s recent schedule for rate hikes has increased yields on savings accounts. As a result, it may be necessary to adjust your idea of a good rate for a high-yield savings account.
A good rate for a high-yield savings account is over 4%, as many banks now offer. This is almost 12 times higher than the current average savings rate of 0.35%, according to FDIC data. For example, a $5,000 deposit at 4% would earn $200 in interest over a year, while the same deposit in a traditional savings account with a 0.35% rate would earn only $17.50 annually.
The average interest rate for high-yield savings accounts is around 3.90%, with a typical range of 3.40% to 4.55% APY. To get the best available yield on your account, it is recommended to shop and compare rates from multiple banks, credit unions, and online lenders. You should also select an account with the best combination of low-interest rates, minimal fees, and other benefits.
It is uncertain where rates will go in 2023, but financial experts can make predictions based on specific indicators such as interest rates. The Fed’s consistent rate increases in 2022 benefited yields for savings accounts across the board. After a quarter-point raise in February, the Fed’s target rate is now between 4.5% to 4.75%, the highest rate in over 15 years. While inflation rates may cool, there is no indication from the Fed that lower interest rates are on the horizon.
Although some traditional banks offer high-yield savings accounts, credit unions and online lenders usually offer the best rates. It is important to compare offers from multiple financial institutions and understand the fees associated with an account, as well as the minimum balance requirements.
By comparing several bank offers, you should be able to find a suitable high-yield savings account with a strong rate, low fees, and reasonable minimum balance requirements. Use the table below to find an account that’s right for you and start earning more interest!