What Is the Average Interest Rate on a Savings Account?

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Whether you're putting money away for a rainy day or saving toward a goal, a savings account is a safe and accessible option. You also have the potential to earn interest on your balance without much additional risk.

Average savings account rates can vary based on the rates the Federal Reserve sets, as well as the bank or credit union you start your account. In comparing a variety of savings accounts, we identified where you can maximize your interest earnings with above-average rates.

Key Takeaways

  • The average savings-account interest rate has typically been below 1%.
  • Some banks offer high-yield savings accounts that can be as high as 10 times the overall average.
  • Savings account rates at traditional banks are among the lowest, even if you have multiple accounts and higher deposits.
  • Average savings account rates tend to rise following federal interest rate increases.

Average Savings Account Interest Rates

The average rate for a savings account rises and falls over time. For example, in October 2022, the average savings account interest rate was 0.21%. The month before, the average rate was 0.17%. One year before, the average was 0.06%.

Note

The average savings rate is calculated based on rates available from federally-insured banks and credit unions for accounts with at least $2,500 in them.

What causes rates to rise and fall? As banks raise and lower their interest rates based on changes in federal rates, savings accounts follow. But even in times when savings rates are low—say, below 0.20%—you can usually find savings accounts with higher rates. The best savings accounts rates are well above average, with some going as high as 3.60% APY in October 2022, for example. Below are a few examples of rates from banks at that time:

  • Bask Bank: 3.60%
  • DollarSavingsDirect: 3.50%
  • Synchrony: 2.75%
  • Bank of America: 0.01% to 0.04%
  • Wells Fargo: 0.01% to 0.02%
  • Chase: 0.01%

How Savings Account APY Works

While interest rate and APY are commonly used interchangeably, the two rates are different. The interest rate is the amount the bank has decided to pay on deposits.

The APY—annual percentage yield—represents how much you'll actually earn on your deposits in one year based on how often interest compounds.The higher the APY, the more interest you'll earn on your savings.

Note

For mortgages, the interest rate is the base rate the lender charges for your loan. Your APR is the actual percentage you pay when all fees are included in your mortgage.

Let's say you've just received a $10,000 bonus at work and you're considering two savings accounts. One offers 0.02% APY and the other offers 2.00% APY, and both compound monthly. After one year, the 0.02% account will have earned you $2, while the 2% account will earn you $202.

Most banks advertise APY, but if you happen to have the interest rate instead, you can calculate APY with this formula:

100 [(1 + Interest/Balance)(365/Days in term) − 1]

Note

Calculating the APY is more complicated if your account offers tiered rates on different balances, or changes the rate after a certain time period.

Types of Savings Accounts With the Best Interest Rates

The average savings account interest rate is a good basis for comparison, but you can typically find banks offering more competitive rates once you know the types of accounts to look for.

High-Yield Savings Accounts

High-yield savings accounts, or "HYSAs," offer higher-than-average rates and typically have no fees. Some HYSAs are easily accessible with no deposit requirements. Others require a minimum deposit to open an account and a minimum balance to receive the best rates. HYSAs are often found at online banks, which have lower operating costs compared to traditional brick-and-mortar banks.

Online Savings Accounts

Online savings accounts are offered by banks that operate exclusively online. These interest rates are among the highest available and accounts typically come with no fees.

While some online banks operate under a bank with physical locations, they don't have a physical presence. That means you can't visit a branch to open an account, deposit cash, or speak to someone face-to-face.

Note

FDIC coverage limits may combine deposits at a bank and its online divisions.

Relationship Savings Accounts

Some traditional brick-and-mortar banks offer higher savings account rates for customers who own at least one other account. These rates tend to be lower than rates from an online bank, but a relationship savings account may appeal to consumers who prefer access to physical bank branches. In that case, opting for an account that offers a relationship bonus will give you a slightly better return.

Historical Savings Account Interest Rates

Paying attention to the economic news and trends can give you an idea of where savings account rates are headed and where to park your extra cash.

When the Federal Reserve raises interest rates, the average savings account interest rate shortly follows, although it usually doesn’t rise symmetrically with the Fed rate. For instance, the average savings account rate rose 0.11 percentage September 2021 to September 2022, increasing from 0.06% to 0.17%. By comparison, the effective federal funds target rate rose nearly 2.5 percentage points from February to September 2022.

Of course, the opposite is also true. When the Fed cuts interest rates, savings account rates drop, too. Even rates for HYSAs dropped to well below 1% when federal rates were near zero in early 2022.

Frequently Asked Questions (FAQs)

How is a savings account most useful?

A savings account provides a safe place to keep your money, earn interest, and still access your money at any time. When you open a savings account at an FDIC- or NCUA-insured bank or credit union, your total balances at the bank or credit union are insured for up to $250,000.

How do you open a savings account?

You can open a savings account in person at a bank branch or online. The process typically involves completing an application, providing a picture ID (such as a driver's license), and making the minimum deposit, if one is required.

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Sources
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. FDIC. "National Rates and Rate Cap—Previous Rates," Click October 18, 2021.

  2. FDIC. "National Rates and Rate Cap—Previous Rates," Click September 19, 2022.

  3. FDIC. "National Rates and Rate Caps."

  4. FDIC. “National Rates and Rate Caps.”

  5. https://www.baskbank.com/

  6. Dollar Savings Direct. “Dollar Savings Direct.”

  7. Synchrony. “High Yield Savings.”

  8. Bank of America. “Bank of America Advantage Savings.”

  9. Wells Fargo. “Savings Accounts and CD (Time Account) Rates.”

  10. Chase. “Chase Savings Interest Rates.”

  11. FDIC. "National Rates and Rate Cap," Click September 20, 2021.

  12. Federal Reserve Bank of St. Louis. “Federal Funds Effective Rate.”

  13. FDIC. “Your Insured Deposits.”

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