Similar to standard savings accounts, but they reward you with a significantly higher interest rate. As a result, your money grows faster, making it a good vehicle to save for an emergency fund or long-term savings. The interest rate for these accounts is expressed as an annual percentage yield (APY).
In the recent past, savings account rates have lagged, as interest rates have been at record lows However, the Federal Reserve’s recent aggressive schedule for rate hikes has given savings account yields a lift. As such, account holders may need to reframe their idea of a good rate for a high-yield savings account.
You can easily explore your local high-yield savings options here to see how much you can make or use the table below to get started.
What is a good rate for a high-yield savings account?
A good rate for a savings account is a rate higher than what you are currently earning on your savings. Specifically, a good rate for a high-yield savings account is over 4%, as many banks now offer. That’s about 12 times higher than the current average savings rate of 0.35%, according to Federal Deposit Insurance Corporation (FDIC) Information
A 4% yield on a $5,000 deposit will earn you $200 in interest a year. In contrast, a similar deposit in a traditional savings account with a rate of 0.35% would provide only $17.50 in annual earnings. As this example illustrates, you can leave money on the table if your savings are in a standard account instead of the national average rate..
What is the current rate on a high yield savings account?
At the time of this writing, the average interest rate isAround 3.90% with a typical range of 3.40% to 4.55% APY. With average earnings, here’s what you could earn with a single deposit in a high-yield savings account compared to a traditional savings account interest rate of 0.35% APY.
- Potential earnings of $3.50 on a traditional account with 0.35% APY
- Potential earnings of $39 in a high-yield savings account with a balance of 3.90%
- Potential earnings of $17.50 on a traditional account with 0.35% APY.
- Potential earnings of $195 in a high-yield savings account with a 3.90% APY
Improve your chances of getting the best available yield on your account by shopping and comparing rates for multiple banks, credit unions and online lenders. Ideally, you’ll choose a savings account with the best combination of low-interest rates and lowest fees, among others. You can start shopping for an account with the highest interest rate here now or use the table below to explore your local options.
Rates on high-yield savings accounts are likely to remain strong
There’s no telling where rates will go in 2023, as world events and other economic influences are unpredictable. However, financial experts can make predictions based on specific indicators.
One of these indicators is the interest rate. In 2022, the Federal Reserve’s continued rate hikes benefit savings account yields across the board. afterThe upward trend continues with the Fed It brought the target rate to between 4.5% and 4.75%, the highest rate in more than 15 years.
While inflation may be cooling, there is no indication from the Fed that lower interest rates are on the horizon. After the most recent rate lift, Federal Reserve Chair Jerome Powell Additional rate hikes are forecast, said, “I don’t see our rate going down this year.” Given the Fed’s outlook, high interest rates should continue, which bodes well for high-yield savings rates in 2023.
How to Open a High-Yield Savings Account
While some traditional banks offer high-yield savings accounts, you’ll usually find your best rates with a credit union or online lender. Online banks have simplified the process so that you can open an account within minutes on your desktop or mobile phone.
It doesn’t hurt to check with your current bank to see what yields you can get. But it is wise. As you investigate offers, make sure you understand the fees associated with an account and look for a low- or no-fee account.
Check the minimum balance requirements
Beware of minimum balance requirements, which are often associated with high yields. Don’t be fooled by high yields that require you to deposit $25,000 to get exceptional rates. 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!