The answer depends on what you're saving and how much you have

No single bank gives the best rate for everyone. The bank with the highest rate on a savings account might offer a lower rate on a money market account. A bank that pays well on balances under $100,000 might pay less on larger amounts. And the rates themselves change weekly—sometimes daily—so a bank that leads today may not lead next month.

What matters is matching the account type to what you're doing with the money, then checking the current rates at banks that serve your situation. A high-yield savings account at an online bank often beats a traditional bank's savings account by a full percentage point or more. But if you need to access your money in the next few months, a money market account or short-term certificate of deposit (CD) might offer better terms.

The banks offering the highest rates tend to be online-only institutions—they have lower overhead than brick-and-mortar banks and pass some of that savings to depositors. But you should also check credit unions in your area, which sometimes match or beat online rates and may offer better customer service if something goes wrong.

Key Takeaways

  • Online banks typically offer higher rates than traditional banks because they have lower operating costs, but the difference changes constantly.
  • The best rate for you depends on the account type—high-yield savings, money market, or CD—and how long you plan to leave the money untouched.
  • Rates change weekly, so comparing banks on the day you plan to open an account matters more than reading a list from last month.
  • Credit unions sometimes match online rates and may offer better support if you need to dispute a transaction or resolve a problem.
  • Banks may offer higher rates on larger balances or require a minimum deposit, so check the terms before you move money.

How to find the current highest rates

Start by visiting the websites of online banks directly—Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, and Charles Schwab Bank are common names in this space, but new competitors enter regularly. Each bank posts its current rate on the account page, usually near the top. Write down the rate, the minimum deposit required, and any restrictions on how often you can withdraw money.

Then check your local credit union. If you work for a large employer, attend a university, or belong to a professional organization, you may already be a member of a credit union without knowing it. Credit unions often match or exceed online bank rates and may waive fees that other banks charge. The CO-OP Network and Allpoint ATM networks mean you can withdraw cash at thousands of locations even if your credit union is small.

Compare the rates side by side in a spreadsheet or on paper. Include the account type, the annual percentage yield (APY), the minimum balance to earn that rate, and any fees. A rate that requires a $25,000 minimum deposit is not the best rate if you only have $5,000 to save. A rate with a monthly maintenance fee eats into your earnings.

Why online banks usually pay more

Online banks have no physical branches, no tellers, and no expensive real estate. They spend less on operations, so they can offer higher rates to attract customers. They also tend to focus on deposit products—savings accounts and CDs—rather than trying to sell you loans, credit cards, and investment services. That focus means more of their revenue goes back to depositors.

Traditional banks with branches pay for all of that infrastructure. They also make money by lending out deposits at higher rates than they pay you. If a bank pays you 4% on savings but lends at 7%, the difference is their profit. Online banks operate on thinner margins and rely on volume—many small accounts—rather than a few large ones.

The trade-off is convenience. You cannot walk into an online bank and speak to someone face-to-face. If you need to resolve a problem, you'll use phone, email, or chat. Most people find this acceptable for a savings account that they touch once or twice a year. If you move money frequently or need when ready help, a local bank or credit union may be worth a lower rate.

Account types and where rates differ most

High-yield savings accounts are where online banks typically lead. These accounts have no maturity date—you can withdraw money whenever you want—but the bank can change the rate at any time. Right now, online banks often pay between 4% and 5% APY on high-yield savings, while traditional banks might pay 0.5% to 1%. That difference compounds quickly on larger balances.

Money market accounts work similarly but often require a higher minimum balance and may limit how many withdrawals you can make per month. Some banks pay slightly higher rates on money market accounts than on savings accounts, but not always. Check both at each bank.

Certificates of deposit (CDs) lock your money away for a set time—three months, six months, one year, five years—in exchange for a may provide rate. Banks often pay higher rates on longer-term CDs. A one-year CD might pay 4.5%, while a five-year CD might pay 4.8%. The catch is that you cannot touch the money without paying a penalty, usually a few months of interest. This is where rates vary most between banks, so comparing CDs across at least three institutions is worth the time.

What to check before you move your money

Verify that the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or, for credit unions, the National Credit Union Administration (NCUA). This insurance protects your deposits up to $250,000 per account type at each institution. If a bank fails, your money is safe. Most online banks and all federally chartered credit unions carry this insurance, but check the bank's website to be sure.

Read the account terms for withdrawal limits, minimum balance requirements, and fees. Some banks charge a monthly fee if your balance drops below a certain amount. Others charge a fee if you withdraw more than a certain number of times per month. These fees reduce your effective rate. A 4.5% rate with a $10 monthly fee is worse than a 4.2% rate with no fees, depending on your balance.

Check whether the bank offers a way to link your account to your primary checking account for straightforward transfers. Some online banks make this straightforward; others require you to initiate transfers through your main bank. This matters if you need to move money quickly.

How rates change and what that means for you

Banks set their rates based on what the Federal Reserve does. When the Fed raises its benchmark rate, banks usually raise the rates they pay on savings accounts and CDs. When the Fed cuts rates, banks cut what they pay you. This happens with a lag—sometimes weeks—so a bank might not lower its rate when ready after a Fed cut, but it will eventually.

For savings accounts and money market accounts, the bank can change the rate whenever it wants, with no penalty to you. You do not have to accept a lower rate; you can move your money to another bank. For CDs, the rate is locked in for the term you choose. If rates fall after you open a CD, you keep the higher rate. If rates rise, you are stuck with the lower rate unless you close the CD early and pay the penalty.

This means the best time to open a CD is when rates are high and you expect them to fall. The best time to open a savings account is whenever you have money to save, because you can move it if a better rate appears. Do not wait for rates to be perfect—they never are, and you lose interest while waiting.

Credit unions as an alternative

Credit unions are member-owned cooperatives, not for-profit institutions. They often pay rates that match or beat online banks, especially on savings accounts and CDs. Some credit unions offer rates that online banks do not advertise because credit unions focus on serving their members, not maximizing growth.

To join a credit union, you usually need to meet a membership requirement—work for a certain employer, live in a certain area, or belong to a certain group. Many people may have access to without knowing it. Search for "credit union near me" or visit the CO-OP Network website to find credit unions you can join.

Credit unions also tend to have better customer service for disputes and problems. If a transaction goes wrong, you can often speak to someone at a local branch. This matters less for a savings account that you rarely touch, but it matters more if you use the account frequently.

Frequently Asked Questions

Can I move my money between banks without losing interest?

Yes. When you close an account at one bank and open it at another, you do not lose the interest you already earned. The interest accrues daily and is paid to you when you close the account. You only lose future interest if you move money to a bank with a lower rate. There is no penalty for moving savings accounts or money market accounts between banks.

What happens if a bank lowers its rate after I open an account?

For savings and money market accounts, you can move your money to another bank at any time. For CDs, the rate is locked in for the term, so a rate cut does not affect you. If you want a higher rate before your CD matures, you can close it early, but you will pay an early withdrawal penalty, usually a few months of interest.

Is it safe to keep money in an online bank I have never heard of?

Yes, as long as it is FDIC-insured. Check the bank's website for the FDIC logo and confirmation that deposits are insured up to $250,000. Online banks are regulated the same way as traditional banks. The only real risk is that customer service may be slower or less personal, not that your money is unsafe.

Do I need a minimum balance to earn the advertised rate?

Most banks require a minimum deposit to open the account, but some pay the advertised rate on any balance above zero. Others pay the advertised rate only if you maintain a certain minimum—often $1,000 or $10,000. Check the account terms before you open it. If the minimum is higher than you can deposit, look for another bank.

Should I open CDs at multiple banks to earn higher rates?

Yes, if you have enough money and want to lock in different rates for different time periods. You can open a one-year CD at one bank and a three-year CD at another. Each account is insured separately up to $250,000, so you can spread money across multiple banks without losing FDIC protection. This strategy works well if you expect rates to fall and want to lock in current rates before they do.