A good APY depends on where you bank and what you're comparing it to
There is no single "good" APY—it moves with the Federal Reserve's interest rate decisions, which change several times a year. What matters is how your bank's rate compares to three things: the national average for regular savings accounts, the rates at other banks you could move to, and what high-yield savings accounts are currently offering.
As of early 2024, the national average APY on a regular savings account at a brick-and-mortar bank sits around 0.01% to 0.05%. If your bank is paying that, you are earning almost nothing on your balance. High-yield savings accounts at online banks typically pay 4% to 5.35%, depending on the bank and the week. The gap between these two is real money: on a $10,000 balance, the difference between 0.01% and 4.5% is roughly $450 per year.
The second part of "good" is whether the rate is stable or falling. Banks lower their rates when the Federal Reserve cuts its benchmark rate, which signals that savings rates across the industry are about to drop. If you see your bank's rate dropping while others stay flat, that's a sign to compare offers elsewhere.
Key Takeaways
- Regular savings accounts at traditional banks typically pay 0.01% to 0.05% APY, while high-yield accounts pay 4% to 5.35%, a difference of hundreds of dollars per year on the same balance.
- A "good" rate is one that matches or beats the current high-yield average for your account type, which you can check by comparing three to five banks in your region.
- Online banks and credit unions often pay higher rates than brick-and-mortar branches because they have lower overhead costs.
- Your bank's rate can drop without notice when the Federal Reserve cuts rates, so checking competitor rates every few months helps you stay current.
How to compare rates across banks
Start by listing the banks you could realistically move to. This usually means online banks (which have no branch requirement), credit unions in your area, and any brick-and-mortar banks you already use. Write down each bank's current APY, the minimum balance required to earn that rate, and whether there are monthly fees that would eat into your interest.
A bank offering 4.5% APY but charging a $10 monthly maintenance fee is worse than one offering 4.2% with no fees. The fee erases roughly $120 per year, which is more than the rate difference would earn you on most balances. Check the fine print for whether the APY applies to your whole balance or only amounts above a certain threshold.
Once you've narrowed it to two or three banks with competitive rates and no hidden fees, move your money to whichever one offers the highest rate. The process usually takes three to five business days. You don't lose interest during the transfer—your old bank pays interest through the day you withdraw, and your new bank starts paying from the day the money lands.
Why online banks and credit unions typically pay more
Online banks have no physical branches, no tellers, and no expensive real estate. They pass those savings to customers through higher interest rates. A bank like Marcus or Ally can afford to pay 4.5% because they're not maintaining a building on Main Street.
Credit unions work the same way but operate as member-owned cooperatives rather than for-profit companies. They often pay rates competitive with online banks and may offer better terms if you meet membership requirements—sometimes as straightforward as living in a certain county or working in a certain industry.
Traditional banks with branches pay lower rates because their costs are higher. They need to cover rent, staff, and technology across hundreds of locations. If you value in-person service, that's a real trade-off. But if you only need a savings account and never visit a branch, you're paying for a service you don't use.
What happens to your rate when the Federal Reserve moves
The Federal Reserve sets a benchmark interest rate that influences what banks pay on savings. When the Fed raises its rate, banks usually raise theirs within days or weeks. When the Fed cuts, banks cut faster—sometimes within hours. This means a "good" rate today might not be good in three months.
You don't have to move your money every time rates shift slightly. But if your bank's rate drops 0.5% while competitors stay flat, that's a sign the bank is being aggressive about protecting its margins. At that point, comparing rates again makes sense. Many people check rates every three to six months, especially during periods when the Fed is actively changing policy.
Some banks advertise "no penalty" or "no lock-in" on savings accounts, which just means you can move your money whenever you want. That's standard for savings accounts—there's no penalty for leaving. The phrase is marketing, not a special feature.
The difference between savings accounts and money market accounts
Money market accounts often pay slightly higher rates than savings accounts at the same bank, but they come with restrictions. Most require a higher minimum balance (often $2,500 to $10,000) and limit how many withdrawals you can make per month. If you need to access your money regularly, a regular savings account is simpler.
If you have a larger balance sitting idle and don't need to touch it often, a money market account might earn you an extra 0.1% to 0.3% APY. Do the math: on a $50,000 balance, 0.2% more is $100 per year. If the higher minimum balance or withdrawal limits create friction, it's probably not worth it.
When a lower rate might still be the right choice
A bank paying 4.2% instead of 4.5% is objectively worse for your savings rate. But if that bank is where you keep your checking account, has no monthly fees, and offers good customer service, the difference might be worth it to you. On a $5,000 balance, 0.3% is $15 per year—less than the cost of a single pizza.
The real cost of switching banks is the time and attention it takes. If you have automatic bill payments set up, you'll need to update them. If you receive direct deposits, you'll need to change that information with your employer. For some people, that friction is worth more than the interest difference.
But if you're moving money you're not actively using—an emergency fund, a down payment fund, money you're saving for a specific goal—switching to a higher-rate account takes 20 minutes and costs you nothing. That's the scenario where rate shopping makes the most sense.
Frequently Asked Questions
Is 4% APY on a savings account actually good right now?
Yes. As of early 2024, 4% is in the middle of the high-yield range. Most online banks pay between 4% and 5.35%, so 4% is competitive. Traditional banks pay 0.01% to 0.05%, so 4% is dramatically better. Check what your current bank pays—if it's less than 3%, you're leaving money on the table.
Will my APY stay the same, or does the bank change it?
Banks can change APY at any time without notice, though they usually move in response to Federal Reserve decisions. Your rate might drop 0.5% in a month or stay flat for six months. You're not locked in. If your rate drops and competitors offer more, you can move your money.
Does it matter if I have $1,000 or $100,000 in the account?
The APY is the same regardless of balance at most banks. A $1,000 balance earning 4.5% makes $45 per year. A $100,000 balance makes $4,500. The percentage is identical, but the dollar amount matters more when you're comparing whether it's worth switching banks.
What if I need the money in a few months—should I still move it?
Yes, as long as the new bank has no early withdrawal penalties (most don't). Even three months at a higher rate beats three months at a lower one. The only reason not to move is if switching costs you more in fees or time than you'd earn in interest.
Can I lose money if I move my savings to a different bank?
No. Your balance is insured up to $250,000 by the FDIC at each bank. Moving money between banks doesn't put it at risk. The transfer takes three to five business days, and you earn interest the whole time—your old bank pays through the day you withdraw, your new bank pays from the day it arrives.