Capital One savings accounts do earn interest, but the rate changes based on market conditions and the account type you choose
Capital One offers several savings products, and all of them pay interest on the money you deposit. The amount of interest you earn depends on which account you open and what the current interest rate is. Interest rates move up and down throughout the year based on what the Federal Reserve does with its benchmark rate — when the Fed raises rates, banks typically raise savings rates too, and when the Fed lowers rates, savings rates usually fall.
The most common Capital One savings product is the 360 Savings account, which is an online-only account. Because Capital One doesn't operate physical branches, they can offer rates that are often higher than banks with brick-and-mortar locations. You can check Capital One's website to see the current rate on any of their savings accounts, since rates change frequently and what you see today may be different next month.
Key Takeaways
- Capital One's 360 Savings account earns interest on your balance, with the rate posted on their website and updated regularly as market conditions change.
- Interest is calculated daily on your account balance and deposited monthly, meaning you earn interest on your interest over time.
- You can move money between your Capital One savings account and checking account online without fees or waiting periods.
- Capital One also offers Money Market accounts and CDs (certificates of deposit), each with different interest rates and rules about when you can withdraw your money.
How interest is calculated and paid on your account
Capital One calculates interest on a daily basis, which means they look at your balance every single day and add a small amount of interest. At the end of each month, all that daily interest is combined and deposited into your account. This is called compounding — you earn interest on your original deposit, and then the next month you earn interest on that interest too, which means your balance grows faster over time.
The interest rate you see advertised is an annual percentage yield, or APY. This number tells you how much interest you would earn in a year if you left your money untouched. If the APY is 4.00%, that does not mean you earn 4% every month — it means you earn roughly that amount spread across all twelve months. The exact amount depends on how much money is in your account and how long it stays there.
Different Capital One savings products and their rates
Capital One offers more than one type of savings account, and each one has a different interest rate. The 360 Savings account is their basic online savings account with no monthly fees and no minimum balance requirement. The 360 Money Market account typically pays a higher interest rate but may have different rules about how many times you can withdraw money each month.
Capital One also sells CDs, which stands for certificate of deposit. A CD is an account where you agree to leave your money untouched for a set period of time — usually three months, six months, one year, or longer. In exchange for locking up your money, the bank pays you a higher interest rate than a regular savings account. If you withdraw the money before the time period ends, you pay a penalty, so CDs work best if you know you will not need that money for a while.
You can see the current rates for all of these products on Capital One's website. Rates change frequently, so the number you see today will not necessarily be the same next week.
What happens to your interest if you withdraw money
If you take money out of your Capital One savings account, you stop earning interest on that amount starting the day you withdraw it. Interest is only paid on the balance that remains in the account. For example, if you have $5,000 in your account earning interest, and you withdraw $1,000, you will only earn interest on the remaining $4,000 going forward.
Capital One does not charge you a fee for withdrawals from a regular savings account, and you can withdraw money as many times as you want. This is different from a CD, where withdrawing early costs you money in the form of a penalty.
How to track your interest earnings
You can see how much interest you have earned by logging into your Capital One account online or through their mobile app. Your account statement shows the interest deposited each month, and you can also see a running total of interest earned year-to-date. This information is useful for tax purposes, since interest income must be reported on your tax return.
Capital One will also send you a form called a 1099-INT if you earn more than a certain amount of interest in a year. This form reports your interest income to the IRS and to you, and you use it when filing your taxes. Keep this form in a safe place once you receive it.
Comparing Capital One rates to other banks
Interest rates vary from bank to bank, and they change constantly. A rate that is high today might be average next month if other banks raise their rates. To decide whether a Capital One savings account makes sense for you, it helps to compare their current rate to rates at other online banks and traditional banks in your area.
Online banks like Capital One often pay higher rates than banks with physical branches because they have lower costs. However, some online banks pay even higher rates than Capital One, so it is worth checking a few options. You can find current rates by visiting each bank's website or using a rate comparison tool. Keep in mind that the highest rate is not always the best choice — you also want to make sure the bank is safe (which you can check by looking for FDIC insurance) and that their website and app are straightforward for you to use.
FDIC insurance protects your money at Capital One
Capital One is an FDIC-insured bank, which means your deposits are protected by the Federal Deposit Insurance Corporation. If Capital One were to fail, the FDIC would return your money up to $250,000 per account type. This protection applies to your savings account, checking account, and other accounts separately, so if you have $250,000 in savings and $250,000 in checking, both amounts are fully protected.
This insurance is automatic — you do not have to do anything to get it, and Capital One does not charge you for it. It is one reason why keeping money in a bank account is safer than keeping cash at home or investing in ways that are not insured.
Frequently Asked Questions
What is Capital One's current savings account interest rate?
Interest rates change frequently and vary depending on which account you choose. Visit Capital One's website to see the current rate for their 360 Savings account, Money Market account, or CDs. The rate you see is the most up-to-date information available.
Can I move money between my Capital One savings and checking account without paying a fee?
Yes. Capital One allows you to transfer money between your savings and checking accounts online at no cost, and the transfer usually happens right away or within one business day. There are no limits on how many times you can do this.
Do I have to keep a minimum balance in a Capital One savings account to earn interest?
No. Capital One's 360 Savings account has no minimum balance requirement, so you earn interest on whatever amount you have in the account, even if it is just a few dollars. Some other banks require you to keep a certain amount on deposit to earn interest or avoid fees.
What happens to my interest if interest rates go down?
If the Federal Reserve lowers rates, Capital One will eventually lower the interest rate on your savings account too. When that happens, you will earn less interest going forward, but the interest you already earned stays in your account. Your balance does not go down — you just earn interest at a slower rate.
Is the interest I earn on a Capital One savings account taxable?
Yes. Interest income is taxable, and you must report it on your tax return. If you earn more than a certain amount in a year, Capital One will send you a 1099-INT form showing how much interest you earned. Keep this form with your tax documents.