Chase offers two high-yield savings accounts, but neither pays what online banks do

Chase has two savings products marketed as high-yield: the Chase Savings Account and the Chase Premier Savings Account. Both pay interest, but the rates are lower than what you will find at online banks or credit unions. As of early 2024, Chase Savings paid around 0.01% annual percentage yield (APY) on most balances, while Premier Savings paid around 0.01% to 0.35% depending on your account balance and relationship with Chase. Online banks routinely offer 4% to 5% APY on savings accounts with no balance requirements.

The reason Chase rates are lower is structural: Chase operates physical branches, pays for customer service staff, and maintains a massive infrastructure. Online banks have lower costs and pass some of that savings to depositors through higher rates. If your goal is to earn meaningful interest on savings, a Chase account is not the efficient choice, even though Chase is a safe place to keep money.

Key Takeaways

  • Chase Savings and Chase Premier Savings both exist, but neither pays rates competitive with online banks or credit unions.
  • Chase Premier Savings requires a minimum balance and pays slightly more than Chase Savings, but the difference is small at current rates.
  • Money in a Chase savings account is insured by the FDIC up to $250,000, the same protection online banks offer.
  • If you want higher interest on savings, you will earn more at an online bank, even after accounting for the convenience of Chase branches.

How Chase Premier Savings works and who it is for

Chase Premier Savings is the higher-tier option. It requires a minimum opening balance (typically $25,000) and pays a slightly higher rate than regular Chase Savings. The rate structure is tiered: the more you keep in the account, the higher your APY, up to a cap. At current rates, the difference between the lowest and highest tier is usually less than 0.25%, so a $25,000 balance and a $500,000 balance earn nearly the same rate.

Chase Premier Savings makes sense only if you already have a large balance at Chase and want to keep everything in one place. The convenience of having your checking, savings, and investments all at one bank may be worth more to you than the interest rate difference. But if your primary goal is to earn interest on money you are not spending, an online bank will pay you significantly more.

Why Chase rates lag behind online banks

Online banks like Marcus, Ally, and American Express Personal Savings have no physical branches, no tellers, and no branch staff. Their cost per customer is much lower. They pass that savings to depositors by offering rates that track closer to the Federal Reserve's benchmark rate. When the Fed raises rates, online banks raise their savings rates within days. Chase raises rates more slowly and to a smaller degree.

Chase also makes money by lending out deposits at higher rates than it pays you. The wider the gap between what it pays you and what it charges borrowers, the more profit it makes. Online banks operate on thinner margins because they have fewer ways to make money from deposits. This is not a moral failing on Chase's part — it is how retail banking works — but it means you will earn less interest at Chase than elsewhere.

FDIC insurance and safety at Chase

Money in a Chase savings account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account holder per bank. This means if Chase fails, the FDIC will reimburse you for balances up to that limit. Online banks are also FDIC-insured, so there is no safety trade-off when you move money to earn a higher rate.

If you have more than $250,000 to save, you can open multiple accounts at Chase (or at different banks) to keep each one under the insurance limit. Some people spread large balances across several banks specifically to maximize FDIC coverage, though most people do not need to worry about this.

How to compare Chase savings to other options

When you are deciding where to keep savings, look at three things: the APY, any fees, and how often the rate changes. Chase Savings has no monthly fee and no minimum balance, which is good. But the rate is fixed by Chase and does not move as quickly as rates at online banks.

To compare, visit the websites of Marcus, Ally, American Express Personal Savings, and a few credit unions in your state. Write down the current APY for each. Then calculate how much interest you would earn on your balance over one year at each rate. The difference will show you what you are giving up by staying at Chase. For a $10,000 balance, the difference between 0.01% at Chase and 4.5% at an online bank is about $450 per year.

Moving money from Chase to a higher-rate account

If you decide to move savings to an online bank, the process takes a few days. You open an account at the new bank, then link your Chase checking account to it. You can transfer money electronically using the new bank's transfer tool or by giving Chase the new bank's routing number and account number. Chase will send the money via ACH (Automated Clearing House), which usually takes one to three business days.

You do not have to close your Chase savings account. Many people keep a small balance there for convenience and move the bulk of their savings to a higher-rate account. This way you have access to Chase branches if you need cash, but your money is earning more interest elsewhere.

When a Chase savings account makes sense anyway

A Chase savings account is practical if you use Chase for checking and want to move money between accounts when ready. Transfers between your own Chase accounts happen in real time, with no waiting. If you are saving for something in the next few weeks or months and plan to spend the money soon, the interest rate matters less because you will not earn much anyway.

Chase savings also makes sense if you have a very small balance — under $1,000 — and do not want to manage accounts at multiple banks. The interest difference on a small balance is negligible, and the simplicity may be worth it. But if you have $5,000 or more sitting in savings for more than a few months, moving it to an online bank is worth the five minutes it takes to open an account.

Frequently Asked Questions

Does Chase have a savings account that pays 4% or 5%?

No. Chase Savings and Chase Premier Savings both pay less than 1% APY. Online banks and some credit unions offer 4% to 5% APY on savings accounts with no balance requirements. If you want a higher rate, you will need to move your money outside of Chase.

Can I earn interest on money in my Chase checking account?

Chase checking accounts pay little to no interest. If you want to earn interest, you must move money to a Chase savings account or to another bank. Some online banks offer checking accounts that pay interest, though the rates are usually lower than their savings accounts.

What happens to my interest rate if the Federal Reserve raises rates?

Chase usually raises its savings rates when the Fed raises rates, but the increase is often smaller and slower than at online banks. If you are watching your rate closely, you may notice that online banks move faster. You can always move your money if Chase's rate falls too far behind.

Is my money safe in a Chase savings account?

Yes. Chase is FDIC-insured up to $250,000 per account holder. Your money is just as safe at Chase as at any online bank. Safety is not a reason to choose Chase over an online bank or vice versa.

Can I withdraw money from my Chase savings account anytime?

Yes. Chase savings accounts have no withdrawal limits or penalties. You can move money to your Chase checking account when ready, or transfer it to another bank within one to three business days. There is no lock-in period.