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Rates on various types of savings accounts are rising as the Federal Reserve raises interest rates. Are you looking for an account where you can save money? Here’s a rundown of the best savings rates you’ll find today.
Related: Compare the Best High Yield Savings Accounts
Savings Rate Today: Traditional Savings Account
Traditional savings accounts, known as “statement savings accounts” in the banking industry, have been known to pay paltry interest in recent years. This is gradually changing, thanks to the Fed.
Today’s highest interest rate on a standard savings account is 2.18%, according to data from Bankrate.com. If you get a basic savings account with a rate in this general area, you’ve found a good deal. A week ago, the best rate was 2.15%.
The national average rate is just 0.10%, according to the most recent data from the FDIC, the government agency that insures bank deposits. Today’s average APY for a traditional savings account is 0.56%, according to Bankrate.
APY, or Annual Percentage Rate, reflects the actual return your account will earn for a year. It takes into account compound interest, which is the interest that accumulates on the interest in your account.
Savings Rate Today: High Yield Savings Account
High yield savings accounts often earn much higher interest than a conventional savings account. But the tradeoff is that you’ll have to jump through a few hoops for the bank or credit union. Often this means making a large deposit to open the account.
On high yield accounts requiring a minimum deposit of $10,000, the current best interest rate is 2.00%. It’s been unchanged for a week.
The average of these accounts is now 0.12% APY.
On high yield savings accounts with a minimum opening deposit of $25,000, the highest rate offered today is 2.50%. You will do well if you can find an account with a rate close to 2.50%. Last week at this time, the best rate was 2.05%.
The current average is 0.24% APY for a high yield account with a minimum deposit of $25,000.
Savings Rate Today: Money Market Account (MMA)
Money market accounts are savings accounts that combine some of the features of checking accounts. Generally, you can write checks and take advantage of debit card privileges.
MMAs tend to pay slightly higher interest than a standard savings account. The FDIC says the average MMA rate is 0.12%, compared to 0.10% for a traditional savings account.
But today, the best money market accounts have rates as high as 1.49%. This is below the peak rate of 2.02% from a week ago.
The average APY for an MMA is now 0.14%, according to Bankrate.
How to choose a savings account
If you are looking for a traditional savings account, a high yield savings account or an MMA, there are a few things to keep in mind.
A good interest rate is important, but it’s not the only factor when selecting an account to hold your savings. Another important consideration is whether the account has a minimum deposit and whether you have enough money to fund the account.
You will also want to understand the fees. Savings accounts can come with monthly maintenance fees, excess transaction fees (if you ignore withdrawal limits), and other annoying fees that can erode your returns.
And before signing up for your account, be sure to explore the reputation and security of the bank or credit union. Read reviews, see what people have to say about customer service, find out how the financial institution answers consumer questions, and know that your money will be protected.
Look for an account insured by the FDIC or, in the case of credit unions, the NCUA. These federal agencies provide up to $250,000 of insurance per depositor per bank for each category of account ownership.
