5 tips to earn the highest interest rate on a savings account

Though the rates on savings accounts have remained low at many big banks, there have been significant rate increases at online and community banks over the past year or so. The Federal Reserve’s rate hikes throughout 2022 and 2023 led to higher rates on top-yielding savings accounts, and they’ve stayed high since the Fed has kept rates steady in 2024.

Though inflation is slowing, high prices have taken a toll on consumers’ budgets, and getting a higher yield can better help you make up for those losses. It also means you can earn returns on money that would otherwise remain stagnant.

Here are some tips to help you get the best rate on your savings.

1. Research current savings account rates

The first step to get the best annual percentage yield (APY) is to understand what’s considered competitive in the current interest rate environment. The best savings accounts today pay around 5 percent APY. Meanwhile, the national average is 0.58 percent APY, and many big banks continue to offer rates that are much lower.

Compare rates at multiple brick-and-mortar banks, online-only banks and credit unions. Online banks tend to pay higher rates than traditional banks.

While big banks typically don’t pay high rates, they can offer additional perks for loyalty rewards, such as for using other bank services or keeping a high balance across accounts at the bank.

Local credit unions are another option. These are not-for-profit, member-owned institutions that distribute their profits to their members. This may translate into higher savings rates.

2. Compare high-yield savings accounts online

Doing a more targeted search comparing high-yield savings accounts is an easy way to find the best APYs. Most of these accounts are from online banks (though not all of them), so make sure you’re comfortable banking online. Online banks are just as safe as regular banks.

When comparing accounts, look for features and associated fees. Much of the important information about the account can be found in fee schedules and disclosures. Some things to look out for include:

• Monthly maintenance fees
• Minimum balance requirements
• Transaction limits and penalties
• Automated savings features
• Options for transferring money in and out of the account
• Past account problems such as data breaches

If the bank has low or no fees and helpful tools, consider that in your evaluation. You may be willing to choose a bank with a slightly lower APY if its tools and reduced costs help you save more money over time.

3. Avoid tiered interest rates

Some banks offer tiered interest rates to reward customers who maintain higher balances. Savings accounts may offer premium rates if you deposit at least $10,000 or $25,000, for example.

However, you can find top-yielding accounts that pay the same yield across all balances. If you end up stashing all of your money into a savings account to meet the balance requirement, you might miss out on other investment opportunities. In many cases, excess cash may be better off invested in the market with a target annual return rate of about 10 percent.  Plus, if you need to withdraw some of the cash in a tiered-rate savings account, your rate might drop.

4. Avoid teaser rates

The best available interest rates may be short-lived. Banks may offer teaser or promotional rates, which are attractive interest rates used to get new customers to open a savings account. Banks may significantly lower the teaser rate after just a few months.

You may also have to maintain a minimum balance and meet other requirements to get the high rate. Always check the fine print explaining the rate’s terms.

5. Consider switching banks

If your current savings account is only offering average or below average rates, it might be time to switch banks, especially in an environment where the best savings rates are almost 10 times the national average. Some of the top rates available exceed 5 percent APY — that’s an opportunity you could be missing out on if you settle with a familiar but low-paying account.

Shop around for the best savings rates and look into transferring your money into a new account if one appeals to you.

Bottom line

Despite low rates at big banks, there are still opportunities to earn higher yields on your savings. With the Federal Reserve’s rate hikes and online and community banks offering competitive rates, it’s important to research and compare rates to get the best APY.

Avoid tiered and teaser rates, and consider switching banks if your current account is not offering a high enough rate. Don’t settle for average rates, take advantage of the current interest rate environment and make your money work harder for you.

— Bankrate’s Marcos Cabello provided an update to this article. Autumn Cafiero Giusti contributed to a previous version of this article.