Are you still earning less than 1% APY at a traditional bank? High-yield savings accounts are living up to their name by offering up to 4.40% APY, which is significantly higher than the national average of 0.41% APY. With the Federal Reserve maintaining steady rates and inflation predicted to remain around 2.4%, these accounts provide returns that not only protect your purchasing power but also help grow your wealth in real terms.
The top high-yield accounts can be found at FDIC-insured digital banks that, due to their lower overhead costs compared to brick-and-mortar banks, can offer higher APYs without monthly maintenance fees, minimum balance requirements, or other common fees that might hinder your earnings. This results in tangible benefits — for instance, a $10,000 deposit earning 4.40% APY could yield about $440 annually, compared to just $41 at the national average and $1 at most major banks.
These modern accounts usually come with robust online banking platforms and smartphone apps for easy linking to your checking account, money management, and progress monitoring. Unlike high-yield certificates of deposit, you’ll have convenient access to your funds as needed, with most digital banks not imposing limits on the number of monthly withdrawals.
To find the best rates on FDIC-insured accounts that can support your daily expenses, boost your savings, or create an emergency fund for a successful year of saving, you can sign up in just minutes. The top savings rates as of Tuesday, May 13, 2025, are offered by FDIC-insured digital banks and online accounts, with rates reaching up to 4.40% APY at institutions such as Valley Bank, Bread Financial, CIT Bank, and others.
Valley Bank Direct Savings offers 4.40% APY with a $1,000 minimum for new customers, while Bread Financial High-Yield Savings provides 4.30% APY with a $100 minimum deposit. Barclays Bank Tiered Savings starts at 4.10% APY with no minimum balance requirement, and CIT Bank Platinum Savings offers 4.10% APY on balances of $5,000 or more. SoFi Checking and Savings offers up to 3.80% APY and a cash bonus of up to $300 with direct deposit, and Discover Online Savings provides 3.60% APY with no minimum balance.
While these brands may not be as recognizable as American Express, Capital One, or Discover, they are FDIC-insured internet-only banks or cooperate with an FDIC-insured bank to offer deposit accounts protected for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), similar to traditional banks.
Furthermore, in response to the pandemic, the Federal Reserve has permanently suspended the limitation on transactions and withdrawals from high-yield savings accounts, allowing many banks to no longer restrict
3% Down 1 basis point – 1-month CD: 0.24% to 0.25%
Down 1 basis point – 3-month CD: 1.42% to 1.43%
Down 1 basis point – 6-month CD: 1.60% to 1.61%
Down 1 basis point – 12-month (1 year) CD: 1.77% to 1.78%
Down 1 basis point – 24-month (2 year) CD: 1.49% to 1.49%
No change – 36-month (3 year) CD: 1.35%
No change – 48-month (4 year) CD: 1.27%
No change – 60-month (5 year) CD: 1.34%
Looking at the average rate updates over the past year, there has been minimal movement for traditional savings accounts, with more significant changes seen in short- and long-term CDs. The FDIC is a government agency responsible for ensuring stability and public trust in the U.S. financial system, offering insurance on consumer deposit accounts.
For more details, explore these common bank fees you should avoid paying and learn about savings accounts, designed for storing money not intended for regular expenses, with interest rates varying from 1% to 4% APY. Savings accounts can offer either simple or compound interest, with compound interest leading to faster savings growth over time.
Understanding the difference between high-yield savings accounts and traditional savings accounts is essential as each type offers varying earning potential, with both types federally insured up to $250,000 by the FDIC or NCUA per person, per account. High-yield savings accounts can provide more significant returns on your savings balance compared to traditional accounts.
Digital banks and online accounts offer significantly higher interest rates compared to traditional savings accounts, with some institutions providing yields that are more than 10 times the national average. Leading digital banks like SoFi Checking and Savings offer rates up to 3.80% APY, without any fees or minimum deposit requirements, making it easy to maintain and grow your savings over time.
Choosing a high-yield savings account over a traditional one can lead to better returns, thanks to competitive rates and fewer fees offered by digital banking platforms. These accounts also provide convenient features such as mobile apps for easy money management and check deposits.
When selecting a savings account, it’s important to consider factors beyond just the advertised APY, as interest rates can fluctuate over time. Look for accounts with promotional rates, low or no minimum balance requirements, easy access to funds through ATMs or mobile apps, and federal insurance protections up to $250,000 per account.
In addition to savings accounts, other options like Certificates of Deposit (CDs), Money Market Accounts (MMAs), and high-yield checking accounts can also help you save and grow your money. CDs offer fixed rates of return but may come with withdrawal penalties, while MMAs provide competitive rates with limited check-writing privileges. High-yield checking accounts combine the benefits of high APYs with unlimited debit and check-writing capabilities.
Consider these alternative accounts to maximize your savings and earnings, and stay informed about the latest trends in savings rates and high-interest accounts to make the most of your financial decisions.
The Federal Reserve, the country’s central bank, sets the benchmark interest rate known as the Fed rate. This rate impacts the interest rates on deposit accounts, loans, mortgages, credit cards, and other financial products. When the Fed rate increases, so do the Annual Percentage Yields (APYs) on savings accounts, certificates of deposit (CDs), and money market accounts. Currently, the top high-yield savings accounts offer over 4% APY.
In response to the highest inflation in four decades following the pandemic, the Federal Reserve raised the target interest rate 11 times between March 2022 and July 2023. However, to address economic conditions, the Fed announced substantial rate cuts: a half-point cut on September 18, followed by quarter-point cuts after its November and December policy meetings.
On May 7, 2025, the Federal Reserve decided to pause rate cuts for a third time, maintaining the federal funds target interest rate between 4.25% and 4.50%. The Fed aims to achieve maximum employment and stabilize inflation at 2%. Despite economic uncertainties, the Fed emphasized the stability of the labor market and the need for data-driven decisions regarding future rate adjustments.
Looking ahead to the next policy meeting on June 17 and June 18, 2025, it is uncertain if there will be further rate cuts. Market expectations suggest a possibility of another quarter-point cut, with the Fed indicating a potential course for future adjustments. Economists are closely monitoring inflation and labor reports for insights into the timing of future Fed rate changes. Recent data shows signs of moderating inflation, with annual rates easing and prices declining in certain sectors.
Following a recent period of low inflation, many are cautious about the potential for faster price growth due to President Trump’s trade policies and the temporary pause on reciprocal tariffs. Federal Reserve Chair Jerome Powell, speaking at a press conference on May 7, emphasized the Fed’s cautious approach to rate cuts, stating that they will assess the data as it evolves before determining the appropriate monetary policy response. Powell also expressed skepticism about the idea of preemptive rate cuts, noting that decisions should be based on concrete data rather than speculation. The Federal Reserve’s rate-setting committee, led by Powell, is scheduled to announce their decision on interest rates on Wednesday, June 18, 2025, at 2 p.m. Eastern Time.
For more information on the Federal Reserve’s upcoming meeting and how it may impact your finances, it’s important to understand key terms such as Annual Percentage Yield (APY), Member FDIC protection, maintenance fees, minimum deposit requirements, and the difference between fixed and variable APYs. Familiarizing yourself with these terms can help you make informed decisions about your savings and investment strategies. Additionally, exploring the differences between no-penalty CDs and high-yield savings accounts can help you choose the best option based on your financial goals and needs. By educating yourself about these topics and seeking guidance from personal finance resources, you can effectively manage your money and work towards building wealth.
In our comparison guide, we explore the differences between no-penalty CDs and savings accounts for your $10,000 savings. This amount presents an opportunity for financial growth, whether through passive income, retirement fund contributions, or debt repayment. Discover the five smartest moves to make with your $10,000 in our guide.
Compound interest is a concept where interest is earned on both the initial deposit and any accrued interest, boosting savings over time. The Annual Percentage Yield (APY) represents the total interest earned on a deposit, including compounding, over one year. Learn more about compounding in our guide.
Interest earned on a savings account is considered taxable income by the IRS. If you earn over $10 in interest within a year, your financial institution will issue a Form 1099 for tax filing.
The choice between fixed and variable interest rates depends on market conditions, with fixed rates remaining constant over time while variable rates fluctuate. Explore how these rates impact your financial decisions in our guide.
Banks profit by charging higher interest rates on loans than what they pay on customer deposits, creating a spread. Online banks without physical branches can offer higher APYs due to lower overhead costs.
Neobanks partner with FDIC-insured institutions to offer deposit accounts, ensuring up to $250,000 in government protection. Look for FDIC-insured terms when considering digital banking options.
Saving involves keeping money in secure accounts with minimal risk, while investing entails purchasing assets like stocks or bonds for potentially higher returns. Explore our guide for more insights on saving and investing.
Editor’s note: APYs mentioned are accurate as of Tuesday, May 13, 2025, at 7 a.m. ET and may vary by region. Rates are subject to change.
Sources:
– National Rates and Rate Caps, FDIC
– Consumer Price Index Summary, U.S. Bureau of Labor and Statistics
April 11, 2025 – Summary of Producer Price Index News Release by the U.S. Bureau of Labor Statistics, accessed on April 14, 2025. Employment Situation Summary by the U.S. Bureau of Labor Statistics, accessed on May 5, 2025.
