How to Pick the Best Savings Account After Rates Go Up

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The Federal Reserve is expected to raise interest rates in 2022 and 2023 in an effort to combat inflation or rising prices. As a result, it's possible that savings account interest rates may rise in the future, although banks tend to be slow at increasing deposit rates. Still, it might be a good idea to shop around for the best deal on a savings account, both at your own bank and at other institutions.

The chart below shows the average savings account interest rates on non-jumbo deposits from 2009 through today.

Here are six tips for finding a savings account that will give you an interest rate hike.

Consider Credit Unions and Local Banks

Credit unions are insured by the National Credit Union Administration (NCUA), which provides coverage of $250,000 in insurance per owner, per insured credit union, and for each account ownership category, meaning individual or a joint account.

Credit unions may offer better terms on checking accounts and higher interest rates on savings accounts than larger banks. Local banks may also be worth checking out because they can have higher interest rates than the big national chains.

Look at Online-Only Banks

Banks that don’t have physical locations may pay higher interest rates because they have lower overhead costs. However, this can leave people wondering whether or not these online banks are secure.

It's important to verify whether your online bank or a brick-and-mortar bank is insured by the Federal Deposit Insurance Corporation (FDIC). The bank name can be located through the FDIC's BankFind Suite search page to determine if they're FDIC insured.

If the bank is FDIC insured, accounts are insured up to $250,000 per depositor, per FDIC insured bank, per ownership category. Some online banks are owned by big players in financial services like Discover and American Express.

Don’t Fall for a Teaser Rate

Sometimes banks will offer you a high rate or bonus cash to bring you over, but then decrease the rates after a short period of time, which is known as a teaser rate.

Banks, of course, are within their rights to change the rates at any time, but teaser rates are specifically set to expire quickly. The key here is to make sure you read the fine print so that you are getting good interest in the long run.

Weigh the Benefits of CDs Versus Savings Accounts Carefully

Certificates of deposit can be a good savings vehicle and if you shop around you can often get good rates. But sometimes savings account rates are just as good or even better. In an environment where rates are on the rise, you may not want to lock up your money into CDs for three or five years.

Understand Your Minimum Balance and Fees

It doesn’t matter how good the interest rate is if you’re constantly getting whacked with maintenance fees or low balance fees. Some banks allow you to keep your money without fees and have small deposits, while others require $10,000 or more for the best rates.

Make sure you understand what fees your bank charges and how much you need to keep in the account to get the rate you want.

Make Your Savings Automatic

Most people like to spend whatever money is in front of them. There are a few exceptions to this rule, such as people who are super savers, but that doesn’t apply to the bulk of us.

It’s a good idea to make savings as automatic as possible so that you can earn interest on as much money as possible without having to think about it.

There are several ways to do this, but two keys ways are completely mindless, which is good because if you’re not thinking about it, it’s easier to save.

  • The first way is to have an automatic deduction taken out of your checking account and put into your savings account every time you get paid. You can make this deduction for any amount of money you want. It doesn’t matter if it’s $5 or $500. The important thing is that you make the transfer automatically so that you don’t have to think about it.
  • The second way and this is not offered at all banks, is to have your bank put the “round up” change from every debit transaction directly into your savings account. For example, if you buy gas for $21.63, then your bank would charge your checking account $22 and put the additional $.37 in your savings account.

This doesn’t sound like a lot of money, but it can really add up quickly. And like the first method, it’s completely painless.

One of the best things about getting the best interest rate possible in your savings account is that interest earned is as close to free money as you can get. And in a savings account, if it’s under the FDIC limit, it’s as safe as you can get as well.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Credit Union Administration. "How Your Accounts Are Federally Insured," Page One and Two.

  2. Federal Deposit Insurance Corporation. "BankFind Suite: Find Institutions by Name & Location."

  3. Federal Deposit Insurance Corporation. "Deposit Insurance FAQs."

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