As the financial markets eagerly anticipate the Federal Reserve’s forthcoming announcement, high-yield savings accounts remain a lucrative option with returns reaching up to 4.50% APY, outperforming traditional accounts. Analysts widely predict that the Fed will maintain current rates, offering astute savers additional time to capitalize on today’s highest yields. These accounts have a history of offering significantly higher interest rates compared to standard savings accounts, with some exceeding the national average by more than 10 times. The top performers are typically found at FDIC-insured digital banks and online accounts that operate with lower overhead costs than traditional brick-and-mortar banks, enabling them to offer stronger rates, reduced fees, and fewer restrictions on earnings.
Digital banks and online accounts consistently provide savings rates that surpass those offered by physical branches by more than 10 times. By minimizing overhead expenses, these accounts can offer better interest rates, lower fees, and fewer limitations on your earnings. Additionally, they provide robust online banking platforms and mobile apps for seamless account management, making it easier for you to link accounts, track earnings, and monitor progress towards financial objectives.
Whether you’re building an emergency fund, planning for future expenses, or safeguarding your savings against inflation, the top-performing accounts are available for quick signup. Today’s best CDs provide fixed rates of up to 4.75% APY, ideal for locking in before the Fed’s next move. For March 19, 2025, the highest savings rates can be found at FDIC-insured digital banks and online providers such as Lending Club, Bread Financial, and Valley Bank, offering up to 4.50% APY with minimal or no minimum requirements.
Some lesser-known brands like Bread Financial and Valley Bank are among those delivering competitive rates, ranging from 4.25% to 4.40% APY. These FDIC-insured internet-only banks or bank partners ensure deposit accounts are protected up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). While high-yield savings account transactions were previously limited to six per month by the Federal Reserve, this restriction has been permanently lifted post-pandemic, granting more flexibility in managing your funds.
Explore further: How to open a high-yield savings account in five simple steps.
On traditional savings accounts, the Federal Deposit Insurance Corporation records monthly average interest rates on deposits such as certificates of deposit, offering insights into potential earnings at local or traditional banks.
In January and February 2025, there was a comparison of the national deposit rates for traditional low-interest deposit accounts. Here is a breakdown of the rates:
– Savings Account:
– National deposit rate on February 18, 2025: 0.41%
– National deposit rate on March 17, 2025: 0.41%
– Month-over-month change: No change
– Interest Checking Account:
– National deposit rate on February 18, 2025: 0.07%
– National deposit rate on March 17, 2025: 0.07%
– Month-over-month change: No change
– Money Market Account:
– National deposit rate on February 18, 2025: 0.64%
– National deposit rate on March 17, 2025: 0.63%
– Month-over-month change: Down 1 basis point
– 1-month CD:
– National deposit rate on February 18, 2025: 0.22%
– National deposit rate on March 17, 2025: 0.25%
– Month-over-month change: Up 3 basis points
– 3-month CD:
– National deposit rate on February 18, 2025: 1.45%
– National deposit rate on March 17, 2025: 1.43%
– Month-over-month change: Down 2 basis points
And so on for the other CD types.
Overall, there has been minimal movement in traditional savings accounts, while short- and long-term CDs have seen more significant changes. The FDIC, an independent government agency, ensures stability and public confidence in the U.S. financial system by providing insurance on consumer deposit accounts.
A savings account is designed for storing money that is not used for regular expenses and earns interest on the balance. There are differences between simple interest and compound interest, with compound interest allowing for greater growth of savings over time.
High-yield savings accounts and traditional savings accounts both help in growing savings through incremental interest, with the frequency of compounding affecting the overall earnings. Understanding how compounding works can help maximize savings.
The money saved in these accounts is federally insured up to $250,000 by the FDIC or the NCUA per person, per account, safeguarding your nest egg against risk. The key distinction between a High-Yield Savings Account (HYSA) and a traditional savings account lies in earning potential. An HYSA can yield significantly more interest than a traditional account, particularly with digital banks and online accounts offering competitive rates that exceed the national average by over 10 times. Top digital banks and online accounts often feature no fees and no minimum deposits, such as SoFi Checking and Savings offering up to 3.80% APY, making account maintenance hassle-free in the long run.
Delve deeper: High-yield savings vs. traditional savings account: Why the switch is worthwhile
How to compare the best savings accounts
Digital banking provides access to more competitive rates and fewer fees compared to conventional brick-and-mortar banks, with user-friendly apps enabling easy balance monitoring, money management across accounts, and mobile check deposits. While opting for an account based solely on the advertised APY is tempting, it’s essential to note that savings account interest rates are variable and subject to fluctuations over time, potentially resulting in lower rates if the Fed reduces its benchmark interest rate.
When selecting an account, consider factors such as:
Promotional rates: Some high-yield accounts can reach 4% APY or higher, but be wary of promotional rates that may adjust based on market conditions.
Low or no minimums: Opt for accounts that require no minimum balance to earn interest, although an initial deposit or specific balance may be necessary to avoid fees.
Accessibility: Look for account features like ATMs, mobile apps for check deposits, or branch access to suit your banking preferences.
FDIC or NCUA protections: Ensure your account is federally insured for up to $250,000 per person to safeguard your funds.
Delve deeper: Can you lose money in a high-yield account? Unlikely, but here’s what to consider
Other deposit accounts for saving and growing your funds
While a savings account offers flexible access to funds, several alternatives provide the opportunity to store savings securely and earn interest, including:
Certificate of Deposit (CD): A CD offers a guaranteed fixed return on a principal deposit at the end of a specified term, with potential withdrawal penalties before maturity.
Money Market Account: With rates that can surpass traditional savings accounts, an MMA provides similar accessibility to funds alongside limited debit and check-writing privileges.
High-Yield Checking Account: Similar to a money market account, a high-yield checking account combines interest-earning potential with standard checking features.
The account offers a unique combination of high APYs and checking benefits, along with unlimited debit and check-writing privileges not typically found in a High Yield Savings Account (HYSA) or Money Market Account (MMA).
Delve deeper into the comparison between HYSA and money market accounts to determine the best high-APY option for your cash.
Savings rates are closely tied to the target interest rate set by the Federal Reserve, the nation’s central bank. This benchmark impacts interest rates for various financial products, including deposit accounts, loans, mortgages, and credit cards. As the Fed rate increases, so do the APYs on savings accounts, CDs, and money market accounts. Currently, the top high-yield savings accounts offer over 4% APY.
Following multiple rate hikes to combat high inflation post-pandemic, the Federal Reserve made significant interest rate cuts in September, November, and December. The Fed’s decision to maintain the federal funds target interest rate at 4.25% to 4.50% in January marks a pause in rate adjustments amidst efforts to stabilize inflation.
The Fed’s upcoming policy meeting in March 2025 is anticipated to maintain interest rates within the 4.25% to 4.50% range, with expectations of minimal changes. Market analysts are closely monitoring inflation and labor data for insights into potential future rate adjustments. Employment figures and economic indicators, including the impact of various government policies, continue to influence market expectations and decisions.
Amid decreasing consumer confidence and overall economic uncertainty, the latest consumer price index data released on March 12 revealed a slight easing in the annual inflation rate to 2.8% in February, below the 3% mark from the previous month. This news alleviated some concerns about the economy’s well-being. The report indicated a 0.2% monthly increase in prices for goods and services that average Americans pay, a decrease from the 0.5% seen in January. Similarly, the producer price index released on March 13 showed a slowdown in wholesale inflation, with prices paid to producers for goods and services dropping by 0.1% from the previous month and 3.2% over the 12 months ending in February.
Speaking at a University of Chicago policy forum on March 7, Federal Reserve Chair Jerome Powell mentioned, “Despite heightened levels of uncertainty, the US economy remains strong. We do not need to rush, and are prepared to wait for more clarity regarding the Trump administration’s policy changes.” The rate-setting panel led by Powell will announce its rate decision at the end of the meeting on Wednesday, March 19, 2025, at 2 p.m. ET.
For more in-depth information: Find out when the next Federal Reserve meeting is scheduled, what to anticipate, and how it impacts your finances. Here are some key terms to be familiar with:
– Annual Percentage Yield (APY): The total interest earned on your deposit over a year, including compound interest, expressed as a percentage.
– Member FDIC: Indicates that a bank or financial institution is protected by the Federal Deposit Insurance Corporation, ensuring up to $250,000 per depositor.
– Maintenance or Service Fee: Some banks charge monthly fees for account upkeep, though the top high-yield savings accounts may waive these fees if certain requirements are met.
– Minimum Deposit: Certain banks mandate a minimum deposit to open an account, potentially leading to fees if balance requirements aren’t met. The best high-yield savings accounts don’t require minimum balances for high interest rates.
– Variable APY: Interest rates can be fixed or variable depending on the account type, with fixed rates remaining steady despite changes in the Fed rate, while variable APYs fluctuate. Verify the rate type for your desired account to understand the stability.
– Federal Reserve: As the US central bank, the Fed aims to maximize employment, stabilize prices, and moderate long-term interest rates. The Federal Open Market Committee convenes regularly to set the federal funds target rate, influencing deposit account rates.
Further information includes:
– Understanding fixed versus variable interest rates for loans and savings
– Frequently asked questions about savings accounts
– Exploring the differences between a no-penalty CD and a high-yield account for flexible savings
– Accessing personal finance guides to aid in saving, earning, and growing wealth.
Low-risk investments that provide a safe opportunity to grow your money and earn interest without withdrawal fees. The choice between no-penalty CDs and savings accounts depends on your deposit amount, need for access, and savings goals. Explore the differences and considerations in our comparison guide.
Having saved up $10,000, you have various financial opportunities to enhance your financial stability. You can generate passive income, contribute to a retirement fund, or pay off high-interest debt. Discover the top five strategies for maximizing your $10,000 in our guide.
Compound interest refers to earning interest on both your initial deposit and any previous interest earned. It is a powerful way to increase your savings over time. The APY of an account is the total interest earned over one year, including compound interest, typically expressed as a percentage. Learn more about the benefits of compounding in our guide.
Interest earned on a savings account is taxable income according to the IRS. If you earn more than $10 in interest in a calendar year, you will receive a Form 1099 from your financial institution to report on your tax return.
Fixed rates remain constant, while variable rates fluctuate based on market conditions. The choice between fixed and variable rates depends on the financial product. Explore how these rates impact borrowing and saving in our guide.
Banks profit by charging higher interest rates on loans than they pay on customer deposits. This margin, known as the spread, is the primary source of revenue for banks. Online banks can offer higher APYs due to lower operating costs.
Neobanks partner with FDIC-insured institutions to provide deposit accounts, ensuring protection for deposits up to $250,000. Look for “member FDIC,” “FDIC insured,” or “NCUA insured” to confirm your account’s safety.
Saving involves keeping funds in secure accounts, while investing entails buying assets for potential higher returns. Learn more about saving and investing to determine the best strategy for your financial goals.
March 19, 2025, 8:10 a.m. Eastern Time. Annual Percentage Yields (APYs) and promotional rates may vary by region and are subject to change. Sources: Consumer Price Index Summary from the U.S. Bureau of Labor Statistics, accessed on March 13, 2025. Producer Price Index News Release summary from the U.S. Bureau of Labor Statistics, accessed on March 14, 2025. Employment Situation Summary from the U.S. Bureau of Labor Statistics, accessed on March 10, 2025. National Rates and Rate Caps from the FDIC, accessed on March 18, 2025. CME FedWatch Tool from CME Group, accessed on March 19, 2025.
