1.5% is better than the national average, but not the best available right now
A 1.5% annual percentage yield (APY) on a savings account beats the rate most traditional banks offer—which typically sit between 0.01% and 0.05%. But it is not the highest rate you can find. Online banks and credit unions currently offer rates between 4% and 5.35%, depending on the institution and account type. Whether 1.5% is "good" depends on where you are banking and what you are comparing it against.
The difference matters in real dollars. On a $10,000 balance, 1.5% earns you $150 per year. The same $10,000 at 5% earns $500 per year—$350 more. Over five years, that gap grows to $1,750. The longer your money sits, the wider the gap becomes.
Rates change frequently and vary by institution. A rate that is competitive this month may not be next month. The Federal Reserve's decisions on interest rates affect what banks can offer, so the landscape shifts several times a year.
Key Takeaways
- A 1.5% APY is above the national average for traditional banks but significantly lower than rates offered by online banks and credit unions, which currently range from 4% to 5.35%.
- The difference between 1.5% and 5% compounds over time—on $10,000, you earn $350 more per year at the higher rate.
- Rates change when the Federal Reserve adjusts its benchmark rate, so a competitive rate today may not be competitive in six months.
- Your bank's stability, account features, and withdrawal rules matter as much as the rate itself when deciding where to keep your money.
How 1.5% compares to what different banks offer
Traditional brick-and-mortar banks—the ones with physical branches—typically offer rates well below 1.5%. Chase, Bank of America, and Wells Fargo generally pay between 0.01% and 0.05% on savings accounts. If your bank is offering 1.5%, it is likely a regional bank or a bank that has recently raised rates to compete for deposits.
Online-only banks have lower overhead costs and pass some of that savings to customers through higher rates. Institutions like Marcus, Ally, and American Express Personal Savings currently offer rates in the 4% to 4.5% range. Credit unions often match or exceed these rates, particularly if you meet minimum balance requirements or maintain direct deposit.
High-yield savings accounts (HYSAs) are the product category where you find the best rates. These are not investment accounts—your money is still insured by the FDIC up to $250,000—but they pay significantly more than standard savings accounts. The trade-off is usually fewer branches, no debit card, and sometimes a minimum balance requirement.
What you actually earn at 1.5% over time
Interest compounds, meaning you earn interest on your interest. At 1.5% APY, the compounding effect is modest, but it still adds up. Here is what $10,000 grows to over different time periods at 1.5% APY, assuming no additional deposits or withdrawals:
| Time Period | Balance at 1.5% APY | Interest Earned |
|---|---|---|
| 1 year | $10,150 | $150 |
| 3 years | $10,454 | $454 |
| 5 years | $10,768 | $768 |
| 10 years | $11,605 | $1,605 |
Compare this to the same $10,000 at 5% APY: after one year you have $10,500, after five years you have $12,763, and after ten years you have $16,289. The difference is $4,684 over a decade—money you would have earned straightforward by moving your account.
These calculations assume the rate stays constant, which it will not. Banks adjust rates based on Federal Reserve decisions and competitive pressure. A rate of 1.5% today could be 2.5% next year or drop to 1% if the Fed cuts rates.
Why your bank might be offering 1.5%
Banks raise rates when they need deposits. If your bank is offering 1.5%, it is either a regional institution trying to attract customers or a larger bank responding to competition from online banks. Some banks also offer promotional rates for new accounts—1.5% might be the introductory rate that drops to 0.5% after six or twelve months.
Check the fine print. If the rate is promotional, find out when it expires and what the standard rate will be afterward. Some banks also offer tiered rates, where you earn 1.5% on the first $25,000 and a lower rate on anything above that.
The stability of the bank matters too. A smaller regional bank offering 1.5% might be safer than a larger bank offering 0.5%, but only if that bank is FDIC-insured. Check the FDIC's bank search tool to confirm your bank is covered.
When 1.5% might be the right choice for you
If you are choosing between 1.5% and the 0.01% your current bank offers, moving your money is worth the effort. The paperwork takes about fifteen minutes, and you will earn significantly more.
1.5% also makes sense if you value convenience and branch access over maximum returns. If you need to deposit cash regularly or prefer to speak with someone in person, a regional bank offering 1.5% might be worth slightly lower returns than an online bank you cannot visit.
If you are saving for a goal within the next year or two, the difference between 1.5% and 5% is smaller in absolute dollars. On $5,000 over one year, 1.5% earns $75 while 5% earns $250—a real difference, but not transformative if convenience matters to you.
When you should look elsewhere
If you are saving for a goal more than a year away, the gap between 1.5% and 4% or 5% becomes significant enough to justify switching banks. Moving $20,000 from 1.5% to 4.5% earns you an extra $600 per year—enough to cover the time it takes to open a new account.
You should also look elsewhere if the 1.5% rate is promotional and will drop after a few months. Some banks use introductory rates to get you in the door, then drop you to 0.5% or lower. Read the terms carefully before opening the account.
If your bank charges monthly fees or requires a high minimum balance to earn the 1.5% rate, calculate whether those costs eat into your interest earnings. A $15 monthly fee on a $5,000 account wipes out most of the benefit of a 1.5% rate.
How to find out what rate is current right now
Rates change frequently, so the best sources are current, not articles written months ago. Bankrate, DepositAccounts, and NerdWallet all track savings account rates across institutions and update them regularly. You can also visit banks' websites directly—the rate should be clearly displayed on the savings account product page.
When comparing rates, look at the APY, not the APR. APY includes the effect of compounding and is the number that matters for savings accounts. Also check whether the rate applies to all balances or only balances up to a certain amount.
If you find a rate that interests you, open the account before the bank changes it. Rates can shift within days, and there is no may provide a rate you see today will still be available tomorrow.
Frequently Asked Questions
Will my 1.5% rate stay the same forever?
No. Banks change rates based on Federal Reserve decisions and competition. Your rate could go up or down, sometimes within weeks. Check your account statements or log into your bank's website to see your current rate.
Is my money safe in a savings account earning 1.5%?
Yes, as long as the bank is FDIC-insured. The FDIC protects up to $250,000 per account per bank, regardless of the interest rate. The rate does not affect safety—it only affects how much you earn.
Should I move my money to get a higher rate?
If you have more than $5,000 and plan to keep it in savings for at least a year, moving to a 4% or 5% account will earn you significantly more. The process takes about fifteen minutes and costs nothing. The main trade-off is losing branch access if you switch to an online bank.
What if my bank says 1.5% is promotional?
Ask when the promotional period ends and what the standard rate will be afterward. If it drops to 0.5%, plan to move your money before the promotion expires. Some banks let you lock in a rate for a set period, so ask about that option.
Can I earn more than 5% on a savings account?
Savings accounts are capped by what banks can offer while remaining profitable. Rates above 5% are rare and usually come with strings—high minimum balances, limited withdrawals, or promotional periods that expire. If someone promises significantly higher returns, it is likely not a savings account but an investment product with different risks.