Want a high savings account rate? Look at these places
If you're not earning a high yield on your savings, you could be missing out. With the Federal Reserve's target rate range above 5% after a series of interest rate hikes, savers can benefit from high yields on their balances.
But not all bank accounts are the same. If you have a regular savings account with a large, national brick-and-mortar bank, you may only be earning pennies on the dollar. National average interest rates on these accounts are just 0.39% APY, according to the FDIC.
By comparison, you can earn 4.5% or even more with a high-yield savings account. But you may need to look beyond your current bank to find them.
Compare some of the top savings rates right now.
Where to find high savings account rates
Before you open any new bank account, check whether your deposits are insured. Banks should be insured by the FDIC, while credit unions must counterpart in the NCUA. As long as the financial institution you choose is insured by one of these organizations, up to $250,000 in deposits are guaranteed per depositor, per account type against bank failure.
After you make sure your account is insured, you can begin looking for the best combination of rates and account details that fit your savings goals. Here are a few of the best places to get started:
Online banks
Many of the best high-yield savings accounts today come from online banks. Online banks are where you'll find rates above 4% or even 4.5% APY. These banks are generally either online-only or online divisions of larger banks. Because they don't have the same overhead costs of banks with branches, they can afford to pass on the money they save to customers — and attract more business with sky-high interest rates.
Because there are no branches, you'll need to be comfortable completing all your deposits, transfers and other account activity online. Luckily, these banks typically offer robust websites and mobile apps that make the process easy. And you'll generally find customer service help available by phone, email, online chat and more.
Online bank high-yield savings rate examples include:
- UFB Direct: 4.81% APY
- Bread Savings: 4.65% APY
- Salem Five Direct: 4.61% APY
Credit unions
Credit unions are nonprofit financial institutions owned by their members. Membership requirements can vary. Some credit unions are restricted to people who work for a specific employer or live in a certain geographic area, while others allow membership to anyone who makes a small donation to an associated charitable cause.
Credit unions often have both checking and savings accounts available to members. And though they may not offer rates as high as online banks, many still beat out national averages. If you like the appeal of a credit union for the other benefits it offers — great customer service, low fees, potentially flexible lending requirements — it could be worth it to open a savings account with a boosted rate.
Credit union high-yield savings rate examples include:
- Alliant Credit Union: 3.10% APY
- Pentagon Federal Credit Union: 2.70% APY
- State Farm Federal Credit Union: 2.02% APY
Local and community banks
Similar to online banks, local banks tend to have fewer overhead costs than large national bank chains. As a result, their customers can often benefit from fewer fees and, sometimes, higher yields.
But like credit unions, you won't typically find rates as high as online banks from your local bank. However, some savers may prefer the community feeling of visiting a bank branch and supporting a local business. As a compromise, you may even decide to open multiple accounts — one with your local bank and another with a higher-earning online bank.
Local and community bank interest rates can vary widely depending on where you're located. Check with a neighborhood branch to find the top rates near you — and don't forget to compare online banking options with the best high-yield savings rates today.
The bottom line
A high-yield savings account can be one of the best tools to withstand rising prices and economic uncertainty today. Whether you're building an emergency fund or saving for an upcoming big purchase, earning a great rate on your balance can boost your savings even further.
If you're searching for the right high-yield account today, consider whether an online account could be a good fit. Online banks typically offer the highest rates with no fees and great online features. But a credit union or community bank in your area could be a good option too. While you may not score the absolute highest rates you would with an online account, you may find other features and benefits that are a better fit for your savings goals.
