October 5, 2022 – Forbes Advisor

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Rates on a variety of savings accounts are rising as the Federal Reserve boosts interest rates. Shopping for an account where you can park some cash? Here’s a look at the best savings rates you’ll find today.

Related: Compare the Best High-Yield Savings Accounts

Savings Rates Today: Traditional Savings Account

Traditional savings accounts, called “statement savings accounts” within the banking industry, have been known for paying puny interest in recent years. That’s now changing, thanks to the Fed’s campaign of interest rate hikes to combat inflation.

Today’s highest interest rate on a standard savings account is 3.01%, according to data from Bankrate.com. If you land a basic savings account with a rate in that range, you’ve found a good deal. One week ago, the best rate also was 3.01%.

The national average rate is just 0.17%, 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 0.60%, Bankrate says.

APY, or annual percentage rate, reflects the actual return your account will earn during one year. It factors in compound interest, which is the interest that builds up on the interest in your account.

Savings Rates Today: High-Yield Savings Account

High-yield savings accounts typically pay considerably higher interest than a conventional savings account. But the trade-off is you’ll have to meet tough requirements set by the bank or credit union. Often, that means making a large deposit to open the account.

On high-yield accounts requiring a minimum deposit of $10,000, today’s best interest rate is 2.96%. That’s unchanged from one week ago.

The average APY for those accounts is now 0.14% APY, up from 0.13% a week ago.

The current average is 0.32% APY for a high-yield account with a $25,000 minimum deposit. That’s above last week’s 0.31%.

Savings Rates Today: Money Market Account (MMA)

Money market accounts are savings accounts that offer some of the perks of checking accounts. Typically, you can write checks and enjoy debit card privileges.

MMAs tend to pay at least slightly higher interest than a standard savings account. The FDIC says the average MMA rate is 0.18%, versus 0.17% for a traditional savings account.

But today, the best money market accounts have rates as high as 2.47%. That’s above the top rate of 2.23% from one week ago.

The average APY for an MMA is now 0.22%, up from 0.20% last week at this time, according to Bankrate.

How to Choose a Savings Account

To find the best savings account for your needs, you first must answer the question: What exactly are you looking for?

An account where you can do your banking in person, at a branch? That would rule out online-only banks. An account that allows for easy withdrawals? That could rule out any account that limits your monthly transactions. An account that pays decent interest? That would rule out a traditional savings account at one of the big banks, because you’re likely to earn just 0.01% or 0.02% APY.

Don’t settle on any option until you’re certain you have a good grasp on the fees you’ll be charged. Savings accounts can ding you with monthly service fees, excess withdrawal fees and returned item fees (if you deposit checks that bounce), among others. Those charges add up and can gnaw away at your savings.

As you shop around, check reviews and ratings of financial institutions and make sure you choose one that will protect your money with federal insurance—from the FDIC or, in the case of credit unions, the NCUA.

How Often Do Savings Account Interest Rates Change?

Interest rates on savings accounts typically are variable, meaning they can go up or down as other rates change throughout the economy. Savings rates are often influenced by the Federal Reserve’s rate moves, and the central bank in recent months has been pushing up its benchmark federal funds rate to try to get inflation under control.

But while financial institutions are usually quick to boost credit card rates and other borrowing costs as the Fed raises rates, they tend to take their time with increasing the interest paid to savers. Rates on savings accounts have been rising slowly, and that’s likely to continue throughout 2022 and in 2023 as the Fed remains active.

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