What 3.35% APY means for your money

A 3.35% Annual Percentage Yield (APY) is a rate you'll see advertised by some online banks and credit unions, but whether it's "good" depends on what other banks are offering at the same moment you're shopping. APY is the amount your money earns in a year if you leave it untouched — so $1,000 at 3.35% APY grows to $1,033.50 after one year.

The savings account market moves constantly. Banks raise and lower rates based on what the Federal Reserve does with its benchmark interest rate. A rate that's competitive one month might be below average the next. The only way to know if 3.35% is good is to check what other banks are offering on the same day you're deciding.

Right now, some online banks offer rates between 4% and 5.35%, while traditional brick-and-mortar banks often offer less than 1%. If you see 3.35%, it's worth comparing to at least three other banks before you move your money.

Key Takeaways

  • 3.35% APY is higher than what most traditional banks offer, but lower than the highest rates available from online banks and credit unions.
  • The "good" rate changes weekly or monthly because banks adjust their rates based on Federal Reserve decisions and competition.
  • You should compare 3.35% to at least three other banks offering savings accounts before deciding where to put your money.
  • The difference between 3.35% and 4.5% on $10,000 is about $115 per year, so comparing rates is worth a few minutes of your time.

How to compare 3.35% to other current rates

Start by checking the websites of online banks directly — they usually display their current rates on the homepage. Look for savings accounts specifically, not money market accounts or certificates of deposit, which have different terms. Write down the APY and any conditions (like minimum balance requirements) for each one.

Then check your own bank or credit union. Many people don't realize their institution has raised its rate recently. Call or log in to see what they're currently offering. If you have a relationship with them already, you might prefer to stay even if the rate is slightly lower — that's a choice only you can make.

Sites like Bankrate, DepositAccounts, and the Federal Deposit Insurance Corporation (FDIC) website show rates from multiple banks in one place, though the rates may lag by a day or two. Use these to get a quick overview, then verify the exact current rate on the bank's own website before you transfer money.

Why rates change and what that means for you

Banks set savings account rates based on the Federal Reserve's benchmark rate, which is the interest rate the Fed charges banks to borrow from each other. When the Fed raises its rate, banks usually raise savings rates within days or weeks. When the Fed cuts its rate, banks cut savings rates more slowly — sometimes taking months.

This matters because a rate that's good today might not be good in six months. If you lock money into a regular savings account at 3.35%, and the Fed cuts rates, you're fine — your rate stays the same. But if the Fed raises rates and other banks jump to 4.5%, you'll be earning less than you could elsewhere.

Savings accounts have no penalty for moving your money, so you're not locked in. If rates rise significantly and your bank doesn't match them, you can transfer to a bank offering more. This is one reason online banks tend to offer higher rates — they know customers will leave if they don't stay competitive.

The real difference between 3.35% and higher rates

The gap between rates sounds small, but it adds up. On $10,000, the difference between 3.35% and 4.35% is about $100 per year. On $50,000, it's about $500 per year. On $100,000, it's about $1,000 per year. That's real money you're either earning or leaving on the table.

The larger your balance, the more the rate matters. If you have $5,000 in savings, the difference between 3.35% and 4.35% is $50 per year — probably not worth moving banks over. If you have $50,000, it's $500 per year, which might be worth 20 minutes of your time to transfer.

Also consider how long you plan to keep the money in savings. If you're saving for something you'll buy in three months, the rate matters less. If this is money you'll leave untouched for years, a higher rate compounds and makes a bigger difference over time.

What to watch for when comparing banks

Not all savings accounts are the same. Some banks offer a high rate only on your first deposit or first few months, then drop it. Read the fine print to see if the rate is permanent or promotional. A promotional rate might be 4.5% for three months, then drop to 0.5% — that's not actually a good deal.

Check the minimum balance requirement. Some banks require $25,000 or more to earn the advertised rate. If you have less, they might pay you a much lower rate. A few banks have no minimum, which is simpler.

Confirm the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or, if it's a credit union, by the National Credit Union Administration (NCUA). This insurance protects your money up to $250,000 if the bank fails. All major online banks and credit unions have this protection, but it's worth verifying.

When 3.35% might actually be the right choice

If you're comparing 3.35% to rates of 3.4% or 3.5%, the difference is so small that other factors matter more. How straightforward is the bank to use? Can you reach customer service by phone? Do you already have an account there? These things have value too.

If the bank offering 3.35% is your credit union and you use their other services, staying put might make sense. If it's a bank you've never heard of and the rate is only slightly higher than what you have now, the hassle of moving might not be worth it.

But if you're comparing 3.35% to 4.5% or higher, and you have a substantial balance, moving your money takes about 15 minutes and could earn you hundreds of dollars per year. That's usually worth doing.

Frequently Asked Questions

Will my rate stay at 3.35% forever?

No. Banks can change savings rates at any time, usually with no notice required. Your rate will likely drop if the Federal Reserve cuts its benchmark rate. It might also drop if the bank decides to lower rates to reduce costs. Check your bank's website or statements periodically to see if your rate has changed.

Is it better to move my money to a higher rate or stay where I am?

That depends on how much money you have and how much higher the other rate is. If the difference is 0.1% or 0.2%, staying put is probably fine. If it's 0.5% or more and you have $10,000 or more, moving usually makes sense. Use a calculator to figure out how much extra you'd earn in a year, then decide if it's worth the 15 minutes to transfer.

Can I lose money if I move my savings to a different bank?

No. Moving money between banks doesn't cost you anything, and your balance stays the same. The only thing that changes is where the money sits and what rate it earns. You won't lose access to your money during the transfer — most banks complete transfers within one to three business days.

What if I find a bank offering 5% APY?

Read the terms carefully. If it's a legitimate offer from an FDIC-insured bank with no strings attached, it's worth considering. Some banks do offer rates that high, especially online-only banks with low overhead costs. Verify the rate on their website, check that they're FDIC-insured, and make sure there's no promotional period that will drop your rate later.

Does moving my money hurt my credit score?

No. Moving a savings account from one bank to another has no effect on your credit score. Your credit score is based on borrowing and repayment history, not on where you keep your savings. You can move money between banks as often as you want without any credit impact.