The banks and credit unions offering the best rates change month to month
There is no single "best" savings account because interest rates shift constantly and different banks compete for deposits in different ways. Right now, online banks and some credit unions typically offer higher rates than traditional brick-and-mortar banks, but the actual top rate available to you depends on when you're looking, how much you deposit, and which institutions will accept your account type.
The highest rates are usually found at online-only banks because they have lower overhead costs than banks with physical branches. Credit unions sometimes match or beat these rates for their members. Traditional banks with local branches almost always offer lower rates because they spend more on buildings and staff.
Rates change frequently—sometimes weekly. A rate that is highest today may drop next week, and a bank you've never heard of may suddenly offer more. This means the "best" rate is a moving target, and the second-best rate at a bank you already trust may be a better choice than chasing the absolute highest number.
Key Takeaways
- Online banks currently offer higher savings rates than traditional banks because they have lower operating costs and pass those savings to depositors.
- Credit unions sometimes match or exceed online bank rates, but you must be a member to open an account, and membership rules vary by institution.
- The highest rate available changes weekly, so comparing rates on the day you plan to open an account matters more than reading a list from last month.
- Banks with no monthly fees and no minimum balance requirements are often better choices than banks with slightly higher rates but restrictive terms.
- Your money is insured up to $250,000 per account at FDIC-insured banks and up to $250,000 per account at NCUA-insured credit unions, regardless of the rate offered.
Where online banks rank on rates
Online banks dominate the highest-rate competition because they operate entirely through websites and mobile apps. Banks like Marcus, Ally, American Express Personal Savings, and Discover have no branch network to maintain, so they can offer rates that beat most traditional banks by a significant margin.
These banks publish their current rates on their websites, and you can compare them directly. The rates are usually the same whether you deposit $100 or $100,000—there are no tiered rates that reward larger deposits with better terms. Most online banks also have no monthly maintenance fees and no minimum balance requirements, which means you can open an account with whatever amount you have available.
The trade-off is that you cannot walk into a physical location to deposit cash or speak to someone in person. All deposits happen through transfers from another bank account, mobile check deposit, or wire transfer. For most people this is not a problem, but if you regularly deposit cash, an online bank may not work for you.
Credit unions and their member rates
Credit unions are member-owned financial institutions, and many offer competitive savings rates. Some credit unions match or exceed the rates offered by online banks, especially if you maintain a checking account with them or meet other membership requirements.
The catch is that you must be a member to open an account. Membership rules vary widely—some credit unions are open to anyone in a geographic area, others require you to work for a specific employer, belong to a certain organization, or have a family member who is already a member. You can search for credit unions you may be may be able to access to join through the CO-OP Network or by visiting the Credit Union National Association website.
Credit unions are insured by the National Credit Union Administration (NCUA) up to $250,000 per account, the same protection that FDIC insurance provides at banks. If you find a credit union you can join and their rate is competitive, they are a legitimate option worth considering.
Traditional banks and why their rates are lower
Banks with physical branches—Chase, Bank of America, Wells Fargo, and similar institutions—typically offer savings rates well below what online banks and credit unions provide. A traditional bank's savings rate might be 0.01% while an online bank offers 4% or higher, a difference that compounds significantly over time.
The reason is straightforward: branch banks have real estate costs, teller salaries, and other overhead that online banks do not. They pass some of those costs to customers through lower deposit rates and higher fees. If you already have a checking account at a branch bank, moving your savings to an online bank while keeping your checking account where it is will usually earn you more interest with no real inconvenience.
Some branch banks offer slightly better rates on savings accounts if you also maintain a checking account with them or meet other conditions, but these rates still lag behind online options. The convenience of having everything in one place may be worth the lower rate to some people, but the math usually favors splitting your accounts.
How to compare rates and find current offers
The most reliable way to find current rates is to visit bank websites directly and check their savings account pages. Comparison websites like Bankrate, DepositAccounts, and NerdWallet also list rates from multiple banks, though the rates shown may be a day or two behind the actual current rate.
When you compare, look at the Annual Percentage Yield (APY), not just the interest rate. APY accounts for how often interest is compounded, so it shows you the actual return you will earn in a year. A bank advertising a high rate but compounding interest only once a year may earn you less than a bank with a slightly lower rate that compounds daily.
Check whether the rate applies to all account balances or only balances up to a certain amount. Some banks offer a high rate on the first $25,000 and a much lower rate on anything above that. Read the fine print about fees—some banks charge monthly maintenance fees or require a minimum balance, which can erase the benefit of a higher rate.
What happens to your rate if the Federal Reserve changes rates
Savings account rates are not set by individual banks—they follow the Federal Reserve's benchmark interest rate, which changes based on economic conditions. When the Federal Reserve raises its rate, banks typically raise savings rates within days or weeks. When the Federal Reserve lowers its rate, banks lower savings rates just as quickly.
This means a rate that is highest today may not be highest next month. However, the relative ranking usually stays similar—online banks tend to stay ahead of branch banks, and credit unions tend to stay competitive. If you open an account at a bank offering a good rate, you are not locked into that rate forever, but you also will not lose money if rates drop. Your existing balance will earn whatever the new rate is.
The Federal Reserve does not set rates on a fixed schedule. Rate changes happen when the Fed's policy committee meets, which occurs roughly every six weeks. You do not need to monitor this closely—banks will adjust your rate automatically, and you will see the new rate reflected in your account statements.
Account features that matter as much as the rate
The highest rate is not always the best choice if the account comes with restrictions that make it hard to use. Before opening an account, check whether there are monthly fees, minimum balance requirements, or limits on how many times you can withdraw money per month.
Federal Regulation D previously limited savings withdrawals to six per month, but that rule was suspended in 2020 and has not been reinstated. Most banks no longer enforce withdrawal limits, but some still do. If you think you might need to withdraw money frequently, confirm that the bank allows unlimited withdrawals.
Also check whether the bank offers a mobile app and whether you can deposit checks by taking a photo with your phone. These features do not affect your interest rate, but they affect how straightforward the account is to use. A rate that is 0.5% higher is not worth it if you have to mail checks or drive to a branch to deposit cash.
Frequently Asked Questions
Can I move my money between banks if I find a better rate?
Yes. You can transfer money from one bank to another at any time with no penalty. Most banks can initiate an incoming transfer for you, or you can transfer the money yourself through your current bank's website. The transfer usually takes one to three business days. There is no limit on how many times you can move money between accounts.
Is my money safe at an online bank with a high rate?
Yes, as long as the bank is FDIC-insured. Check the bank's website or the FDIC's Bank Find tool to confirm. FDIC insurance protects up to $250,000 per account at each bank, regardless of the interest rate. Online banks are regulated the same way as branch banks, and many are owned by large financial institutions you already know.
What if I need to withdraw money before the interest is paid?
You can withdraw money from a savings account at any time. Interest is calculated daily and added to your account monthly, so if you withdraw before the month ends, you will not earn interest on the withdrawn amount for that month. There is no penalty for early withdrawal—that rule applies to certificates of deposit (CDs), not savings accounts.
Do I need a checking account to open a savings account?
No. You can open a savings account at any bank without having a checking account. However, you will need a way to deposit money into the account—usually a transfer from another bank account you already have. If you do not have any bank account, you will need to open a checking account somewhere first.
Should I put all my money in the account with the absolute highest rate?
Not necessarily. If the highest-rate bank has fees, withdrawal limits, or a clunky app, a bank with a rate that is 0.25% lower but better features may serve you better. Also, remember that FDIC insurance covers only $250,000 per account per bank. If you have more than that to save, you will need accounts at multiple banks anyway.