Money cannot grow on its own, but it can be put to work more effectively with the right financial tools. High-yield savings accounts are currently offering impressive returns of up to 4.40% APY, significantly higher than the average 0.41% offered by traditional accounts. The Federal Reserve recently kept rates steady for the third time in a row, meaning these high-yield accounts will continue to provide elevated returns for the foreseeable future before potential rate cuts later in the year.
High-yield accounts utilize compound interest to earn the same rate on both your initial deposit and any interest earned. What sets these accounts apart is their combination of competitive yields and flexibility. Unlike investments that are subject to market fluctuations or locked accounts that limit access to your funds, high-yield savings accounts offer high returns while keeping your money easily accessible.
Opening one of these accounts is a quick and simple process, usually done online in just a few minutes. Many of these accounts come with user-friendly mobile apps that allow you to monitor your balance and make transfers between accounts. Additionally, deposits in high-yield savings accounts are FDIC-insured up to $250,000, providing the same security as traditional banks.
For the best rates on FDIC-insured accounts while the Federal Reserve holds its current position, consider the following options:
– Valley Bank Direct Savings: 4.40% APY with a $1,000 minimum for new customers
– Bread Financial High-Yield Savings: 4.35% APY with a $100 minimum deposit
– Barclays Bank Tiered Savings: Starting at 4.10% APY with no minimum balance
– 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: 3.60% APY with no minimum balance
These may not be as well-known as traditional banks, but they are FDIC-insured internet-only banks or partners with FDIC-insured institutions, ensuring your deposits are protected up to $250,000. Moreover, the transaction limit on high-yield savings accounts has been permanently suspended, allowing for more flexibility in moving money in and out of your account.
To learn more about finding and opening a high-yield savings account in five steps, explore further information on traditional savings account rates, or to compare the national deposit rates on different types of accounts, such as savings and interest checking, refer to the Federal Deposit Insurance Corporation’s data.
By taking advantage of high-yield savings accounts, you can optimize your returns and make your money work harder for you in the current financial landscape.
In the financial market, the rates for various savings products have changed slightly. Here is a summary of the recent updates:
– Savings Account: 0.62% – 0.63% (Decrease of 1 basis point)
– 1-month CD: 0.24% – 0.25% (Decrease of 1 basis point)
– 3-month CD: 1.42% – 1.43% (Decrease of 1 basis point)
– 6-month CD: 1.60% – 1.61% (Decrease of 1 basis point)
– 12-month CD: 1.77% – 1.78% (Decrease of 1 basis point)
– 24-month CD: 1.49% – 1.49% (No change)
– 36-month CD: 1.35% – 1.35% (No change)
– 48-month CD: 1.27% – 1.27% (No change)
– 60-month CD: 1.34% – 1.34% (No change)
Over the past year, average rate updates for traditional savings accounts have shown minimal movement, while there has been more significant movement for short- and long-term CDs. The FDIC is an independent government agency responsible for ensuring stability and public confidence in the U.S. financial system and providing insurance on consumer deposit accounts.
For further information, you may want to explore common bank fees to avoid, and understand the differences between high-yield savings accounts and traditional savings accounts. If you’re curious about savings accounts, they are designed for storing money not needed for regular expenses and can earn you interest, compounding your savings over time.
Earn significantly more interest with digital banks and online accounts compared to traditional savings accounts. These financial institutions offer high yields that are more than 10 times the national average, passing on savings to customers with rates up to 3.80% APY, such as SoFi Checking and Savings. These accounts come with no fees or minimum deposits, making it easy to maintain your funds in the long term.
Digital banking provides competitive rates and fewer fees compared to brick-and-mortar banks, with user-friendly apps for managing your money and making transactions. While it may be tempting to choose an account solely based on the highest advertised APY, it’s important to consider factors like promotional rates, minimum requirements, and accessibility when selecting an account.
In addition to high-yield savings accounts, there are other options for saving and growing your money, including certificates of deposit (CDs) and money market accounts. CDs offer fixed rates of return over a set term, while money market accounts provide competitive rates with flexible access to your funds. High-yield checking accounts offer the benefits of both savings and checking accounts, with unlimited debit and check-writing privileges.
Consider exploring various deposit account options to find the best fit for your financial goals, ensuring your money is safe and well-positioned to grow over time.
Aligned with the Federal Reserve’s target interest rate, which serves as the country’s central banking institution, interest rates for various financial products such as deposit accounts, loans, mortgages, and credit cards are influenced. As the Fed rate increases, so do the Annual Percentage Yields (APYs) on savings accounts, Certificates of Deposit (CDs), and money market accounts. Presently, the top high-yield savings accounts offer an APY exceeding 4%.
Amid the Federal Reserve’s efforts to combat the highest inflation seen in four decades following the pandemic, the target interest rate was raised 11 times between March 2022 and July 2023. Subsequently, on September 18, the Federal Reserve announced a much-anticipated half-point reduction to its federal funds target interest rate, followed by two additional quarter-point cuts after the November and December policy meetings.
On May 7, 2025, the Fed made the decision to halt rate cuts for the third time. Following the conclusion of the third rate-setting policy meeting in 2025, the Federal Reserve opted to maintain the federal funds target interest rate at 4.25% to 4.50% for the third instance, after implementing three cuts in 2024. This included a substantial half-point cut in September 2024, followed by quarter-point cuts in November and December.
In its post-meeting statement, the Federal Reserve emphasized its commitment to achieving “maximum employment” and stabilizing inflation at 2%. The Fed recognized that the unemployment rate had steadied at a low level in recent months, with solid labor market conditions. Acknowledging increased economic uncertainty, the Fed pledged to meticulously evaluate incoming data, the evolving economic landscape, and risk assessments before considering further adjustments.
Following the March meeting, the Fed adjusted its rate projections to foresee only two quarter-point cuts in 2025, anticipating slower growth and heightened inflation in the near future.
Looking ahead to the Federal Reserve’s upcoming policy meeting on June 17–18, 2025, it remains speculative as to the decisions that will be made. While the possibility of another quarter-point cut in June exists, given the Fed’s indication of potential rate reductions this year, the CME FedWatch Tool suggests a more than 70% likelihood of rates remaining unchanged based on market expectations.
Economists are closely monitoring inflation and labor reports to gauge potential future Fed rate cuts. Data indicates a stabilization in inflation rates, with a decline from a peak of 9.1% in June 2022 to levels ranging between 2.5% and 4% since May 2023. Recent job data released by the Bureau of Labor Statistics on May 2 showed an addition of 177,000 jobs in April, surpassing projections but slightly lower than the revised figure of 185,000 roles added in March. Unemployment remained steady at 4.2%.
Furthermore, the consumer price index for March revealed a reduction in the
Economists were relieved by the recent slowdown in inflation, but many are cautious about the potential impact of President Trump’s trade policies and the temporary halt on “reciprocal” tariffs. Federal Reserve Chair Jerome Powell, speaking at a press conference on May 7, emphasized the Fed’s patient approach to rate cuts, stating that they are monitoring data to determine the appropriate monetary policy response. Powell also expressed skepticism about the idea of preemptive rate cuts, noting that the Fed needs to wait for more data before making decisions.
The Federal Reserve, under Powell’s leadership, will announce its rate decision following a meeting scheduled for Wednesday, June 18, 2025, at 2 p.m. ET.
For more information about the Federal Reserve meetings, how they may impact your finances, and key terms to understand, such as annual percentage yield, FDIC membership, maintenance fees, minimum deposits, and variable APYs, be sure to explore additional resources on savings accounts and interest rates.
Explore key considerations in our comparison guide to no-penalty CDs and savings accounts. Wondering where to place your $10,000 savings? This significant milestone offers various financial opportunities to enhance your financial well-being. Discover smart moves to make with your $10,000. Learn about compound interest, a powerful concept that allows you to earn interest on your initial deposit and any accrued interest along the way. Uncover how to maximize your savings through compounding. Understand that interest earned on savings accounts is taxable income. Find out about fixed versus variable interest rates and how they can impact your financial decisions. Delve into how banks generate revenue from savings accounts and why online banks may offer higher APYs. Assure the safety of your funds with an online neobank or digital account, protected by FDIC insurance. Differentiate between saving and investing and determine the best strategy for your financial goals. Please note that APYs shown are accurate as of Monday, May 12, 2025, at 7 a.m. ET, and may vary by region. Sources include the FDIC and the U.S. Bureau of Labor.
Here are the rewritten references in a more formal style:
U.S. Bureau of Labor and Statistics. (2025, April 11). Tics. Retrieved from [URL].
U.S. Bureau of Labor and Statistics. (2025, April 14). Producer Price Index News Release summary. Retrieved from [URL].
U.S. Bureau of Labor and Statistics. (2025, May 5). Employment Situation Summary. Retrieved from [URL].
