Banks offering the highest interest rates are usually online banks, not the branches on your street

The bank that gives you the highest interest depends on what you're saving in. For a regular savings account, online banks like Marcus, Ally, and American Express Personal Savings typically offer rates two to three times higher than what you'll find at Chase, Bank of America, or Wells Fargo. For money market accounts and certificates of deposit (CDs), the spread is even wider. The reason is straightforward: online banks have lower costs because they don't run physical branches, so they pass some of that savings to you in the form of higher rates.

But "highest" changes constantly. Banks adjust their rates weekly or even daily based on what the Federal Reserve does and what other banks are offering. A rate that's best today might not be best next month. This guide explains how to find current rates, what to compare, and which types of banks tend to offer more.

Key Takeaways

  • Online banks typically offer savings account rates between 4% and 5.35% APY, while traditional brick-and-mortar banks often offer less than 0.5% on the same account type.
  • The highest rates are usually found on money market accounts and CDs, not regular savings accounts, because you agree to keep your money there longer.
  • Interest rates change frequently, so comparing rates across multiple banks takes 15 minutes but can mean hundreds of dollars more per year on a $10,000 balance.
  • Credit unions sometimes offer competitive rates and may have lower fees, but they are only open to members who meet specific requirements.
  • A bank's safety (whether deposits are insured by the FDIC) is separate from its interest rate, so don't choose a bank based on rate alone.

Why online banks pay more interest than traditional banks

A traditional bank like Chase or Bank of America maintains thousands of physical locations. Each branch has rent, staff, security systems, and equipment. Those costs are real, and the bank covers them by keeping interest rates low and charging fees. An online bank like Marcus or Ally has no branches—just servers and customer service staff. Their overhead is a fraction of what a traditional bank spends.

When a bank's costs are lower, it can afford to pay you more interest on your savings without losing money. This is not charity. The bank still makes money by lending out the deposits you give them. But because their costs are lower, they can share more of that profit with savers like you.

This is why the single best way to find a higher interest rate is to look at online banks first. You will almost always find better rates there than at a bank with a physical branch in your town.

How to compare interest rates across different banks

The first step is to decide what type of account you want. A regular savings account is the most flexible—you can withdraw money anytime without penalty. A money market account works similarly but often requires a higher opening balance and pays slightly more interest. A CD (certificate of deposit) locks your money away for a set time—three months, six months, one year, or longer—and pays the most interest, but you pay a penalty if you withdraw early.

Once you know the account type, visit the websites of at least three to five banks and write down their current APY (annual percentage yield). Most banks display this prominently on their savings or CD pages. Do not rely on ads or emails—go directly to the bank's website and look at the actual account page. Rates listed in marketing materials are often outdated.

As you compare, also note the minimum opening balance, any monthly fees, and whether the rate is promotional (temporary) or standard. A bank offering 5.5% for the first three months, then dropping to 2%, is not actually offering you 5.5%. Read the fine print or call and ask how long the rate lasts.

Types of banks and where their rates typically fall

Online banks (Marcus, Ally, American Express, Discover, Synchrony) usually offer the highest rates on savings accounts and money market accounts. As of the time this guide was written, many were in the 4% to 5.35% range for savings accounts, though this changes. These banks have no physical locations and no local customer service by phone—you manage everything online or through an app.

Credit unions are member-owned financial institutions that sometimes offer competitive rates, especially on savings accounts and CDs. However, you can only join a credit union if you meet their membership requirements, which vary. Some are open to people who work for a specific employer, live in a specific area, or belong to a specific organization. If you are already a member of a credit union, it is worth checking their rates against online banks.

Traditional banks (Chase, Bank of America, Wells Fargo, Citibank) typically offer savings account rates below 0.5% APY. They make up for lower rates by offering convenience—many people already have accounts there, and there are branches nearby. If you value that convenience, the trade-off is accepting a much lower interest rate.

High-yield savings accounts are offered by online banks and some credit unions. "High-yield" just means the rate is higher than what you would get at a traditional bank—it does not mean the rate is permanently high. The rate will move up and down as the Federal Reserve changes its policy.

What to check before opening an account at a new bank

Before you move your money, confirm that the bank is insured by the FDIC (Federal Deposit Insurance Corporation) or, in the case of a credit union, by the NCUA (National Credit Union Administration). This insurance protects your deposits up to $250,000 if the bank fails. Most online banks and all federally chartered credit unions carry this insurance, but it is worth verifying on the bank's website or by searching the FDIC's bank finder tool.

Check whether there are any monthly maintenance fees, minimum balance requirements, or fees for transferring money out. Some banks charge a fee if your balance drops below a certain amount, or if you make more than a certain number of withdrawals per month. These fees can eat into the interest you earn, especially if you are starting with a small balance.

Read reviews on independent sites like Trustpilot or the Better Business Bureau, but focus on recent reviews about customer service and technical issues, not on complaints about low rates—every bank will have those. If you see a pattern of people saying the app does not work or customer service is unreachable, that is a real problem worth considering.

How often rates change and what that means for you

Banks change their interest rates in response to what the Federal Reserve does. When the Federal Reserve raises its benchmark interest rate, banks usually raise the rates they offer on savings accounts within days or weeks. When the Federal Reserve lowers its rate, banks lower savings rates too, though sometimes more slowly. This is why the "best" bank for interest changes over time.

You do not need to switch banks constantly to chase the highest rate. The difference between a 4.5% rate and a 5% rate on a $5,000 balance is about $25 per year—not worth the hassle of opening a new account. But if you have $50,000 or more saved, the difference between banks can be hundreds of dollars per year, and it may be worth comparing rates once or twice a year.

If you open an account at a bank and their rate drops significantly while you are there, you can always move your money to a different bank. There is no penalty for closing a savings account or moving funds to another bank (though there may be a penalty for closing a CD early).

CDs and money market accounts: where the highest rates usually are

If you have money you will not need for several months or longer, a CD will almost always pay more interest than a savings account. A one-year CD might pay 4.5% to 5.5% APY, while a savings account at the same bank pays 4% to 5%. The trade-off is that you cannot withdraw the money without paying a penalty—usually a few months' worth of interest.

Money market accounts sit between savings accounts and CDs. They pay more interest than a regular savings account but less than a CD, and you can withdraw money anytime without penalty (though some banks limit the number of withdrawals per month). If you want a higher rate but need access to your money, a money market account is worth comparing.

When comparing CDs, pay attention to the term length. A six-month CD will pay less than a one-year CD, which will pay less than a five-year CD. The longer you lock your money away, the more interest the bank pays you, because they can lend it out for longer. If you think you might need the money sooner, choose a shorter term even if the rate is lower—the penalty for early withdrawal can be steep.

Frequently Asked Questions

Can I move my money between banks if I find a better rate?

Yes. You can close a savings account or money market account at any time with no penalty and move the money to another bank. If you have a CD, closing it early usually costs you some of the interest you earned, so check the penalty before you decide to move. For savings accounts, there is no cost to switching.

Is an online bank safe if I have never heard of it?

Safety depends on FDIC insurance, not on how well-known the bank is. If the bank is FDIC-insured, your deposits up to $250,000 are protected even if the bank fails. Check the FDIC's website or the bank's website to confirm insurance status. Many online banks are safer than you might think because they are owned by larger financial companies.

What is the difference between APY and interest rate?

APY (annual percentage yield) includes the effect of compound interest—interest earned on your interest. A bank might advertise an interest rate of 5%, but the APY might be 5.12% because of compounding. Always compare APY, not the interest rate, because APY tells you what you will actually earn.

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

Most banks require a minimum opening balance—often $0 to $25,000 depending on the bank—but once the account is open, you earn the full advertised rate on whatever balance you have. Some banks lower the rate if your balance drops below a certain amount, so read the terms carefully.

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

Your rate will likely drop within a few weeks. Banks lower savings rates when the Federal Reserve lowers its benchmark rate because they earn less money from lending. This is why a rate that is best today may not be best in six months. You can move your money to a different bank if rates drop significantly, but there is no penalty for staying.