A good APY depends on what account you're holding and what the banks around you are offering this month
There is no single "good" APY that applies everywhere. A savings account earning 4.5% is excellent if you're comparing it to the 0.01% your big national bank offers. That same 4.5% is mediocre if online banks in your area are paying 5.2%. The real measure is whether your rate beats what's available to you right now, in your region, for your account type.
APY moves constantly because the Federal Reserve sets the base rate that banks use to calculate what they pay you. When the Fed raises rates, banks raise what they offer savers. When the Fed cuts rates, banks cut what they pay. A rate that was competitive three months ago may be below average today. This is why comparing your current rate to what new accounts are earning matters more than remembering what you earned last year.
Key Takeaways
- A good APY for a savings account is typically within 0.5% of the highest rate you can find from banks in your region, because rates change monthly and no single number stays "good" for long.
- Money market accounts and certificates of deposit (CDs) usually pay higher APY than savings accounts, so comparing across account types is necessary to know if you're getting a fair rate.
- Banks that operate only online almost always pay higher APY than brick-and-mortar banks because they have lower overhead costs.
- The Federal Reserve's interest rate decisions drive what all banks pay, so checking rates after a Fed announcement helps you know whether to move your money or lock in a CD.
How to find what banks are paying right now
The fastest way to see current rates is to visit a rate-comparison site that updates daily, such as Bankrate, DepositAccounts, or the FDIC's own rate tracker. These sites show you what banks are paying for savings accounts, money market accounts, and CDs, sorted by rate from highest to lowest. You can filter by account type and by whether you want to see only banks that are FDIC-insured (which protects your money up to $250,000 per account).
Look at the top five to ten rates for your account type. If your current bank is paying less than the fifth-highest rate available, you are leaving money on the table. If your rate is within the top three, you are doing well. The difference between the highest rate and the fifth-highest is usually small—often less than 0.3%—but it compounds over time, especially on larger balances.
Check these sites once every three to six months, or after the Federal Reserve announces a rate change. The Fed typically meets eight times a year, and banks adjust their rates within days of an announcement. If you have a large emergency fund or savings you plan to hold for a year or more, moving money to a higher-paying account can earn you hundreds of dollars in extra interest with no additional effort.
Why online banks pay more than traditional banks
Online-only banks consistently offer higher APY than banks with physical branches because they have lower costs. A brick-and-mortar bank pays rent, utilities, and salaries for tellers and branch managers. An online bank has no branches, so it passes those savings to customers in the form of higher interest rates. This is not a sign that online banks are riskier—most are FDIC-insured just like traditional banks—it is straightforward how their business model works.
If you have never used an online bank, the process is straightforward: you open an account through their website, transfer money from your current bank, and manage everything through their app or website. Deposits and withdrawals take one to three business days. You cannot walk into a branch to deposit a check, but most online banks let you deposit checks by taking a photo with your phone.
The difference between savings accounts, money market accounts, and CDs
These three account types offer different APY rates because they have different rules about how often you can withdraw your money. Understanding the difference helps you know whether a rate is actually good for what you need.
Savings accounts let you withdraw money whenever you want, with no penalty. Because the bank cannot count on your money staying put, they pay lower APY—usually 4% to 5.5% depending on the bank and the current rate environment. This is the right account for your emergency fund or money you might need within the next year.
Money market accounts are a hybrid: they pay higher APY than savings accounts (usually 4.5% to 5.8%) but limit how many withdrawals you can make per month without a fee. Some banks allow three to six withdrawals; others allow unlimited transfers but charge a fee if you exceed a limit. These work well for money you want to keep accessible but do not plan to touch often.
Certificates of deposit (CDs) lock your money away for a set period—three months, six months, one year, five years—and pay the highest APY (often 5% to 5.8% for one-year CDs). If you withdraw before the term ends, you pay a penalty, usually a few months of interest. CDs are for money you know you will not need until the maturity date. A good CD rate is one that beats what savings accounts are paying by at least 0.5%, because you are giving up access to your money in exchange for that extra return.
What changes a "good" rate from month to month
The Federal Reserve sets a target range for the federal funds rate—the rate at which banks lend to each other overnight. This is not the rate you earn on your savings, but it is the anchor that determines it. When the Fed raises its target rate, banks raise what they pay savers within days or weeks. When the Fed cuts rates, banks cut what they pay you.
The Fed meets eight times a year to decide whether to raise, lower, or hold rates steady. Each decision is based on inflation, employment, and economic growth. If inflation is high, the Fed raises rates to cool down spending. If the economy is weak, the Fed cuts rates to encourage borrowing and spending. These decisions ripple through the banking system and change what "good" means for your savings.
Between Fed meetings, banks also adjust rates based on competition. If one bank raises its rate to attract new customers, others follow. This is why you might see rates jump 0.2% or 0.3% in a single week. Checking rates after a Fed announcement or after you hear that a major bank has raised its rate helps you know whether to move your money.
When to lock in a rate with a CD
If you believe rates are about to fall, locking in a CD at today's rate protects you from earning less later. If you believe rates are about to rise, keeping your money in a savings account lets you move it to a higher-paying CD when rates go up. This is not about predicting the future perfectly—it is about making a reasonable choice based on what experts and the Fed are signaling.
A practical approach: if the Fed has been raising rates and signals it is done, or if major financial news outlets are predicting rate cuts, a one-year or two-year CD at today's rate locks in your return. If the Fed is still raising rates and has not signaled a pause, keeping money in a high-yield savings account lets you move it to a CD later when rates peak. The difference between a 5% CD locked in today and a 5.5% CD you could get in three months is worth waiting for if you can afford to.
Comparing rates across different banks and account types
The table below shows typical APY ranges and withdrawal rules for the most common savings vehicles. These ranges reflect what banks were offering at the time this article was written, but rates shift constantly based on Federal Reserve decisions and bank competition. Use this as a reference for what to expect when you shop, not as a may provide of what you will find.
| Account Type | Typical APY Range (Current) | Withdrawal Rules | Best For |
|---|---|---|---|
| High-yield savings (online) | 4.5% to 5.5% | Unlimited, no penalty | Emergency fund, money you might need within 1 year |
| Money market account | 4.5% to 5.8% | Limited withdrawals per month; fee if exceeded | Money you want accessible but do not plan to touch often |
| 1-year CD | 5.0% to 5.8% | Locked until maturity; early withdrawal penalty | Money you will not need for 1 year |
| 5-year CD | 4.5% to 5.5% | Locked until maturity; early withdrawal penalty | Money you will not need for 5 years |
| Traditional bank savings | 0.01% to 0.5% | Unlimited, no penalty | Convenience if you need a physical branch; not recommended for savings |
When you compare your own options, look at the APY column first, then check the withdrawal rules and any minimum balance requirements. A rate that is 0.1% higher but requires a $25,000 minimum balance may not be worth it if you have $5,000 to save. The real comparison is between accounts you can actually open with the money you have.
Frequently Asked Questions
Is 5% APY good right now?
It depends on the account type and the current rate environment. For a savings account, 5% is competitive but not the highest available—you can usually find 5.3% to 5.5% from online banks. For a CD, 5% is below average for one-year terms but reasonable for longer terms. Check a rate-comparison site to see what the top five banks are paying for your specific account type.
Should I move my money if my bank is paying 0.5% less than the best rate?
Yes, if you have a balance of $10,000 or more. The difference between 4.5% and 5.0% is $50 per year on $10,000. Over five years, that is $250 in extra interest. The process of moving money takes 10 minutes and one to three business days for the transfer to clear. The effort is worth it for most people.
What happens to my APY if the Federal Reserve cuts rates?
Banks will lower the APY they offer on new accounts and existing savings accounts within days or weeks of a Fed rate cut. If you have a CD, your rate is locked in and will not change until the CD matures. If you have a savings account, your rate will drop, which is why locking in a CD before a rate cut is sometimes worth doing.
Can I get a better rate by keeping a large balance?
Most online banks and many traditional banks pay the same APY regardless of balance size. Some banks offer tiered rates—higher APY for balances above a certain threshold—but these are less common now. Check the terms of your specific bank. If they do offer tiered rates and you have a large balance, moving to a bank with tiered rates could earn you more interest.
Is it worth moving money between banks to chase higher rates?
Yes, if the rate difference is 0.5% or more and you have at least $5,000 to move. The transfer takes one to three business days and costs nothing. You will earn back the difference in interest within a few months. If the difference is 0.1% or 0.2%, the effort is usually not worth it unless you have a very large balance.