Average Savings Account Interest Rates Explained

Average savings account interest rates can be a bit of a mystery, but it's essential to understand how they work to make the most of your money.

Typically, savings account interest rates range from 0.01% to 2.00% APY, depending on the institution and account type.

For example, a high-yield savings account may offer a rate of 2.00% APY, which can earn you around $20 in interest per year on a $1,000 balance.

Most traditional savings accounts, on the other hand, tend to have much lower interest rates, often around 0.01% APY.

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The FDIC tracks average interest rates paid on savings accounts, certificates of deposit, and money market accounts nationwide and updates its data monthly.

The FDIC considers rates paid by credit unions in its data, not just banks.

The national average savings account yield is 0.55 percent APY, according to Bankrate's survey of institutions as of the week of Jan. 16, 2025.

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Many online banks have savings interest rates higher than the national average savings account interest rates.

Bankrate surveys more than 500 banks and credit unions weekly to generate the national averages.

The national average interest rate for savings accounts is 0.42% APY, according to the Federal Deposit Insurance Corp.

Online banks typically offer savings rates that are higher than the national average, while traditional brick-and-mortar banks generally offer lower rates.

For example, deposit $10,000 into an account with a 5.00% APY, and it will earn a little more than $500 after a year.

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The national average interest rate for savings accounts is 0.42% APY, according to the Federal Deposit Insurance Corp. This rate may not be the best option for everyone, as online banks typically offer higher rates.

Money grows faster in an account with a higher interest rate. For example, deposit $10,000 into an account with a 5.00% APY, and it will earn a little more than $500 after a year.

To give you a better idea of the differences in savings rates, here's a comparison of interest rates offered by online and traditional banks:

As you can see, online banks offer significantly higher interest rates than traditional banks.

The national average interest rate for savings accounts is 0.42% APY, which is lower than what online banks typically offer. However, traditional brick-and-mortar banks generally offer even lower rates.

The average interest-checking account pays a meager 0.07% APY, which makes sense since it's primarily used for spending.

Money market accounts, on the other hand, offer a higher average rate of 0.66% APY. They often come with higher minimum opening requirements and more features like check-writing and ATM access.

CDs have the benefit of a fixed interest rate that remains the same for the full term length, with rates ranging from 0.23% to 1.83% APY.

Relationship savings accounts can offer higher rates for customers with multiple accounts.

These rates are generally lower than those from online banks, but may appeal to those who value physical branch access.

Opting for an account that offers a relationship bonus can give you a slightly better return.

When comparing savings rates, it's essential to consider the type of account you're looking at. Online banks offer significantly higher interest rates than traditional branches.

The FDIC tracks average interest rates for savings accounts, certificates of deposit, and money market accounts nationwide. This data is updated monthly and includes rates from credit unions, not just banks.

Online banks provide notably higher interest rates than traditional branches. The overall percentage difference in interest rates between online and branch accounts for personal accounts, as measured by the WalletHub Index, is approximately 406%.

Here's a breakdown of the interest rates for different types of accounts:

The WalletHub Savings Interest Index provides a snapshot of the average interest rates for different account types. For personal online accounts, the index stands at 3.90%, while for personal branch accounts, it's 0.77%.

The savings rates in the US vary greatly by region. The Southeast has the highest savings account interest rates, averaging 0.90% – about 38% more than the Southwest's average of 0.65%.

If you're looking to maximize your savings, you'll want to consider opening a savings account in the Southeast. In fact, even a relatively small balance of $1,000 can earn you 0.89% interest in the Southeast, compared to just 0.58% in the Southwest.

Here's a breakdown of the average savings account interest rates by region:

The Southeast's average savings interest rate has seen a significant increase, rising by approximately two times from Q3 2023 to Q3 2024. This is the most significant rise compared to other regions.

To get a comprehensive picture of savings rates, we need to understand the methodology behind the calculations. The FDIC tracks average interest rates paid on savings accounts, certificates of deposit, and money market accounts nationwide, considering rates paid by credit unions as well.

The data is updated monthly. Bankrate, another source, surveys more than 500 banks and credit unions weekly to generate the national averages.

Information for this report was collected from the websites and online fee schedules of each institution. In some cases, we were unable to locate individual fees or features associated with specific accounts, so we reported the averages of those institutions with valid data.

We reviewed over 1600 savings accounts to present findings by account type and compare a change in fees, features, and rates over time. For the portions of the analysis that present findings by institution type and by region, we reported averages for savings accounts from over 400 financial institutions.

Here's a breakdown of the institutions included in the regional analysis: 24 community banks, 23 small banks, 20 regional banks, 9 National Banks, and 25 credit unions. Each institution-type category, excluding National Banks, is weighted by region and includes five institutions from each region of the US.

The WalletHub Savings Interest Index includes the following weights, adjusted to account for the average savings account balance of $5,923, as reported by Pitney Bowes in 2012. The weights are as follows:

Interest rates for savings accounts can change at any time, and many banks lower or raise their rates in response to changes in the Federal Reserve's fund rates.

Banks may leave their rates unchanged for weeks or even months, but if you're looking for a fixed savings rate, consider opening a certificate of deposit.

Interest rates are influenced by the money supply, which can be affected by the central bank's monetary policy decisions.

A decrease in the money supply can lead to higher interest rates.

The central bank's decision to raise the reserve requirement can also reduce the amount of money available for lending, increasing interest rates.

Higher interest rates can make borrowing more expensive and reduce demand for credit.

A decrease in the demand for credit can lead to lower interest rates.

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Savings rates can change, and it's not uncommon for banks to adjust their rates in response to changes in fund rates set by the Federal Reserve.

Banks can change their savings rates at any time, even if it's just a small adjustment, so it's essential to stay informed about these changes.

If you're looking for a fixed savings rate, consider opening a certificate of deposit, which typically offers rates above the national average for CDs.

APY is a more accurate depiction of the total amount of interest you'll earn, as it includes a savings account's compounding frequency.

The interest rate of an account is often a bit lower than the APY because it only factors in simple interest. APY is updated weekly by Bankrate's editorial team, and rates may have changed since the last update.

To compare different savings accounts, look for the APY percentage, not just the interest rate. APYs may vary by region for some products.

Here's a list of the APYs for popular financial institutions, as of January 16:

There are several types of savings accounts that can help you grow your money, and knowing which ones to look for can make a big difference in the interest rates you earn.

Online banks don't have the overhead of brick-and-mortar banks, allowing them to offer higher interest rates and fewer fees.

One type of savings account that stands out is the high-yield savings account, which can earn you interest rates comparable to some CDs without the need to lock your money up.

Here are some examples of high-yield savings accounts with competitive interest rates:

High-yield savings accounts are a type of savings account that offers higher interest rates than traditional savings accounts. These accounts are offered by online banks and credit unions.

Online banks don't have the overhead that brick-and-mortar banks do, allowing them to pass on more money in interest and charge fewer common bank fees. This means you can earn higher interest rates on your savings without any extra costs.

Some high-yield savings accounts have no balance tiers, meaning you can earn the same interest rate regardless of how much you deposit. For example, Ally Savings Account, Capital One 360 Performance Savings, and Synchrony High Yield Savings Account all have no balance tiers.

Here are some examples of high-yield savings accounts with competitive interest rates:

Keep in mind that some high-yield savings accounts may require a minimum deposit to open an account and a minimum balance to receive the best rates.

Credit unions can be a viable option for those seeking a savings account. Some credit unions offer high interest rates on savings accounts, such as Alliant Credit Union with an interest rate of 3.10%.

Credit unions often require you to open a basic savings account to become a member. This doesn't always pay impressive rates, as seen with Bethpage Federal Credit Union's 0.10% interest rate.

If you're looking for a high-yield savings account through a credit union, consider Alliant or Pentagon Federal Credit Union, which offer rates of 3.10% and 3.00% respectively.

However, not all credit unions pay high rates on savings accounts. For example, Bethpage Federal Credit Union and Connexus Credit Union both offer rates of 0.10%.

Here's a list of some credit unions and their interest rates on savings accounts:

Keep in mind that interest rates can change over time, so it's essential to research and compare rates before opening an account.

Savings accounts are a great way to stash your cash, but it's essential to weigh the pros and cons before opening one.

The pros of a savings account are numerous, with guaranteed interest earnings being a significant advantage. This means you'll earn interest on your deposited funds, which can add up over time.

Easy access to your money is another perk of savings accounts. You can withdraw your funds whenever you need them, without having to worry about penalties or fees.

FDIC/NCUA insurance also protects your funds, giving you peace of mind knowing your money is secure.

The cons of a savings account are worth considering, though. Low interest rates compared to other investment opportunities can make savings accounts less appealing. For example, if you have the option to invest in a higher-yielding instrument, you might earn more interest on your money elsewhere.

The risk of inflation eroding your purchasing power is another con to consider. If inflation rises, the purchasing power of your money may decrease, even if your savings account earns interest.

Lastly, transaction limits can be a drawback for some. You may be restricted on how many transactions you can make per month, which can be inconvenient if you need to access your money frequently.

Here's a summary of the pros and cons of savings accounts: