Following the recent decision by the Federal Reserve to pause its second rate cut, high-yield savings accounts continue to offer attractive interest rates of up to 4.40% APY. This provides an opportunity for savvy savers to benefit from these premium yields before they are expected to decrease later this year. These accounts function similarly to regular savings accounts but without many of the typical banking fees and restrictions that can hinder your earnings. Even with anticipated future cuts by the Fed, these accounts are positioned to consistently outperform traditional savings options, making them a smart choice for growing your funds.
The most competitive rates are currently offered by FDIC-insured accounts at online and digital banks. These institutions, not burdened by the high operating costs of traditional brick-and-mortar banks, are able to offer significantly higher yields. Signing up for these accounts is simple and can be done online from your computer or smartphone. By linking your new account to your existing checking account at any bank, you can easily manage your finances.
For those looking to secure the highest rates this weekend for everyday expenses, short-term financial goals, or building an emergency fund, consider the following FDIC-insured accounts:
– Bread Financial High-Yield Saving: 4.40% APY with a $100 minimum deposit
– Valley Bank Direct Savings: 4.25% APY with a $1,000 minimum for new customers
– Barclays Bank Tiered Savings: Starting at 4.15% APY on balances up to $10,000
– Upgrade Premier Savings: 4.14% APY on balances of $1,000 or more
– CIT Bank Platinum Savings: 4.10% APY on balances of $5,000 or more
– SoFi Checking and Savings: Up to 3.80% APY and a cash bonus of up to $300 with direct deposit
– Discover Online Savings: 3.70% APY with no minimum balance
While these brands may not be as well-known as others like American Express or Capital One, they are FDIC-insured internet-only banks or partners with FDIC-insured banks. This ensures that deposit accounts are secured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Additionally, the Federal Reserve has permanently suspended the limitation on transactions and withdrawals from high-yield savings accounts in response to the pandemic, allowing for more flexibility in moving money in and out of your account.
For those interested in exploring traditional savings account rates, the Federal Deposit Insurance Corporation provides monthly data on average interest rates paid on savings and deposit accounts. This information can give insight into the interest rates you might expect at your local bank or on traditional accounts.
3-month CD: 1.43%-1.45% (Down 2 basis points)
6-month CD: 1.61%-1.63% (Down 2 basis points)
12-month (1 year) CD: 1.78%-1.80% (Down 2 basis points)
24-month (2 year) CD: 1.49%-1.45% (Up 4 basis points)
36-month (3 year) CD: 1.35%-1.31% (Up 4 basis points)
48-month (4 year) CD: 1.27%-1.23% (Up 4 basis points)
60-month (5 year) CD: 1.34%-1.31% (Up 3 basis points)
Looking at average rate updates over the past year, we see minimal movement for traditional savings accounts, with more significant changes for short- and long-term CDs. The FDIC is a government agency dedicated to maintaining financial system stability and public confidence, providing insurance on consumer deposit accounts.
For more information, explore common bank fees to avoid and learn about the benefits of savings accounts, which are designed for storing money not used for regular expenses. These accounts offer interest that can compound to help your savings grow faster. Understanding the differences between simple and compound interest can help you make informed decisions about how to save and invest your money effectively.
High-yield savings accounts and traditional savings accounts both offer opportunities to earn interest on your balance, with the main distinction being the earning potential. High-yield savings accounts typically offer higher interest rates, allowing you to maximize your savings over time. Both types of accounts are federally insured, providing protection for your funds up to a certain limit per account.
In the realm of savings accounts, digital banks and online accounts are leading the way with competitive rates that far surpass the national average, offering high yields that are over 10 times that of traditional accounts. Some of the top digital banks and online accounts, such as SoFi Checking and Savings, provide no fees and no minimum deposits, making it easy to maintain your account over the long haul with an impressive up to 3.80% APY.
When comparing high-yield savings accounts to traditional ones, it becomes evident that the switch is worth it for many reasons. Digital banking offers more competitive rates and fewer fees compared to traditional brick-and-mortar banks, with convenient apps that allow for easy balance monitoring, money management across various accounts, and check deposits via mobile devices.
Although it may be tempting to choose an account solely based on its highest advertised APY, it’s crucial to consider that savings account interest rates can fluctuate over time. Therefore, it’s wise to look for an account that aligns with your banking preferences, considering factors like promotional rates, low or no minimum requirements, ease of access to your funds, and federal insurance protections up to $250,000 per account.
In addition to savings accounts, there are other options available to save and grow your money. Certificate of deposits (CDs) guarantee a fixed rate of return over a specific term but may incur penalties for early withdrawals. Money market accounts offer competitive rates with similar access to funds as savings accounts, while high-yield checking accounts combine high APYs with the flexibility of checking benefits.
It’s essential to stay informed about savings rates and high-interest accounts, as they are influenced by the target interest rate set by regulatory bodies. By exploring these various deposit account options, you can find the best fit for your financial goals and preferences.
The Federal Reserve, the country’s central bank, sets the benchmark Fed rate that impacts interest rates on deposit accounts, loans, mortgages, credit cards, and other financial products. When the Fed rate increases, so do the APYs on savings accounts, CDs, and money market accounts. Currently, the best high-yield savings accounts are offering APYs exceeding 4%.
In response to the highest inflation in four decades following the pandemic, the Federal Reserve raised the target interest rate 11 times from March 2022 to July 2023. However, on September 18, the Fed announced a widely anticipated half-point cut to its federal funds target interest rate, followed by two additional quarter-point cuts after the November and December policy meetings.
On March 19, 2025, the Fed decided to pause rate cuts for the second time, keeping the federal funds target interest rate steady at a range of 4.25% to 4.50%. This marked the second time the Fed halted rate changes since its three consecutive cuts in September, November, and December, totaling a full percentage point decrease in the Fed rate.
The Federal Reserve stated that it aims to achieve “maximum employment” and bring inflation down to 2%. The Fed emphasized the stabilization of the unemployment rate and solid labor market conditions, while acknowledging increased economic uncertainty. The Fed will closely monitor incoming data, the evolving outlook, and risks to determine future adjustments.
Looking ahead to the Fed’s next policy meeting on May 6–7, 2025, it remains uncertain what decisions the Federal Reserve will make. Economists are closely watching inflation and labor reports to anticipate potential future cuts to the Fed rate. Recent data shows sticky inflation rates ranging from 2.5% to 4%, following a peak of 9.1% in June 2022. March’s jobs report revealed a slight increase in unemployment to 4.1%, with employers adding 151,000 jobs.
While concerns about the economy have eased slightly, with the annual inflation rate down to 2.8% in February, there are ongoing uncertainties. The producer price index reported a slowing of wholesale inflation, indicating a cautious economic environment.
In February, prices for goods and services dropped by 0.1% from the previous month and 3.2% over the past 12 months. Federal Reserve Chair Jerome Powell, speaking at a press conference on March 19, highlighted the Fed’s economic outlook of slower growth and higher inflation. Powell mentioned that the Fed was nearing its 2% inflation target, but noted that a significant portion of the inflation was attributed to tariffs. The Powell-led rate-setting panel is set to announce their decision on rates at the end of their meeting on Wednesday, May 7, 2025, at 2 p.m. ET.
For further insights, stay informed about the upcoming Federal Reserve meetings and understand their impact on your finances. It’s essential to grasp key terms such as Annual Percentage Yield (APY), Member FDIC protection, maintenance fees, minimum deposit requirements, and variable APY rates. The Federal Reserve plays a pivotal role as the central bank of the United States, influencing employment, prices, and interest rates through its decisions.
Delve deeper into the distinctions between fixed and variable interest rates for borrowing and saving. Explore FAQs about savings accounts to make informed decisions aligned with your financial objectives. Consider the best options for flexible savings, such as no-penalty CDs or high-yield accounts, based on your deposit amount, accessibility needs, and savings goals. Lastly, if you’ve saved $10,000, evaluate the most suitable placement to optimize growth and security for your funds.
Explore various financial opportunities that can enhance your financial stability. You can utilize passive income streams, boost your retirement savings, or reduce high-interest debt. Check out our guide on the top five strategic ways to make the most of your $10,000.
What is compound interest? Compound interest allows you to earn interest on your initial deposit as well as on the interest you accumulate over time. This method can significantly increase your savings by continuously growing your money. The Annual Percentage Yield (APY) reflects the total interest earned on your deposit over a year, including compound interest, usually calculated on a daily or monthly basis. Learn more about leveraging time to grow your money in our compounding guide.
Do I need to pay taxes on a savings account? Yes, any interest earned on your savings account is considered taxable income by the IRS. If you earn more than $10 in interest within a calendar year, your financial institution will provide you with a Form 1099 for tax filing purposes.
Which is better: fixed rates or variable rates? There isn’t a definitive answer as to whether fixed or variable rates are superior. Fixed rates remain constant over time, while variable rates fluctuate based on market conditions. Your choice between the two will depend on the financial products available. Delve into our guide to understand the distinctions between fixed and variable rates and how they impact your financial decisions.
How do banks profit from savings accounts? Banks typically charge higher interest rates on loans than what they offer on customer deposits, creating a profit margin known as the spread. Online banks and digital platforms, without physical branches, can provide even higher Annual Percentage Yields (APYs) due to reduced overhead costs.
Are online-only neobanks secure for my money? Yes, neobanks are fintech companies that collaborate with FDIC-insured banks to offer protected deposit accounts up to $250,000. The FDIC ensures the safety of your funds, regardless of the neobank’s status. Verify the FDIC-insured status when choosing a banking option.
What sets saving apart from investing? The primary contrast between saving and investing lies in the liquidity of your funds and the associated risks. Saving involves storing money in secure accounts with minimal risk, while investing entails purchasing assets like stocks and bonds for potential higher returns. Learn more in our comprehensive savings and investing guide to tailor your financial strategy.
Editor’s note: The Annual Percentage Yields mentioned are accurate as of Friday, March 21, 2025, at 8:10 a.m. ET. Note that APYs and promotional rates may vary by region and are subject to change.
Sources:
– Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed March 13, 2025.
– Producer Price Index News Release Summary, U.S. Bureau of Labor and Statistics. Accessed March 14, 2025.
– Employment Situation Summary, U.S. Bureau of Labor Statistics. Accessed March 10, 2025
Retrieved on March 18, 2025.
