Interest rates change constantly, so the highest-paying account today may not be the highest next month
No single bank always pays the most. Interest rates move up and down based on what the Federal Reserve does with its benchmark rate, and different banks change their rates on different schedules. A bank paying 4.5% this month might drop to 4.25% next month, while another bank raises from 4.0% to 4.6%. The bank with the highest rate when you open an account may not have it six months later.
What matters more than chasing the highest single rate is understanding where rates tend to be highest and checking them yourself before you open an account. Online banks and credit unions typically offer higher rates than brick-and-mortar banks, because they have lower overhead costs. But you need to compare the actual current rates, not assume one type is always better.
The easiest way to see current rates across many banks at once is to visit a rate-comparison site like Bankrate, DepositAccounts, or NerdWallet. These sites show you what dozens of banks are paying right now, sorted by rate. You can also call or visit the website of any bank directly to see its current rate. Write down the rate, the minimum balance required to earn it, and whether there are any fees that would eat into your interest.
Key Takeaways
- Online banks and credit unions typically pay higher interest rates than traditional banks because they spend less on physical branches and staff.
- The highest rate today will not necessarily be the highest next month, so compare rates at the time you are ready to open an account, not weeks earlier.
- Rate-comparison websites like Bankrate and DepositAccounts let you see current rates from many banks in one place, sorted from highest to lowest.
- Some banks require a minimum balance to earn the advertised rate, so check whether you can meet that requirement before opening.
Online banks usually offer the highest rates
Online banks — banks with no physical locations, only a website and phone line — tend to pay more interest because they do not have to pay for buildings, tellers, or as many customer service staff. They pass those savings on to customers in the form of higher rates. Examples include Marcus, Ally, American Express Personal Savings, and Discover Bank. These banks are FDIC-insured, meaning your money is protected the same way it would be at any other bank.
The trade-off is that you cannot walk into a branch to deposit cash or speak to someone in person. Most online banks let you deposit checks by taking a photo with your phone, and they reimburse ATM fees if you use an out-of-network machine. If you rarely need to deposit cash and do not mind handling banking by phone or computer, an online bank is usually your best bet for a high rate.
Credit unions often compete with online banks on rate
Credit unions are member-owned financial institutions that sometimes pay rates as high as online banks. You have to be a member to open an account, which usually means living in a certain area, working for a certain employer, or belonging to a certain organization. Some credit unions let you join if you donate to a specific charity or live in a specific county.
To find credit unions you might join, visit the CO-OP Network or Alliant Credit Union's website. You can search by location or by employer. Credit unions are insured by the National Credit Union Administration (NCUA), which works the same way as FDIC insurance — your money is protected up to $250,000.
Traditional banks pay less but offer convenience
Banks with physical branches — Chase, Bank of America, Wells Fargo, and others — typically pay lower interest rates on savings accounts. Their rates might be 0.01% to 0.5%, while online banks and credit unions are paying 4% or higher. The reason is the same: they have more overhead, so they keep more of the interest they earn rather than passing it to customers.
You might still choose a traditional bank if you need to deposit cash regularly, prefer speaking to someone in person, or already have a checking account there. Some people find it simpler to keep all their banking in one place, even if it means earning less interest. That is a reasonable choice — just know what you are trading for that convenience.
How to compare rates when you are ready to open an account
Start by visiting a rate-comparison site and filtering for savings accounts. Write down the top five to ten rates you see, along with the bank name, the current rate, and any minimum balance requirement. Then visit each bank's website directly to confirm the rate has not changed since the comparison site updated.
Check whether the rate requires a minimum balance. Some banks pay their advertised rate only if you keep a certain amount in the account — often $500, $1,000, or $25,000. If you keep less, you might earn a much lower rate. Read the fine print to see whether the minimum is a one-time deposit or a balance you have to maintain every day.
Also check whether there are monthly fees. Some savings accounts charge $5 or $10 per month, which would cost you $60 to $120 per year. If you are earning 4.5% on a $1,000 balance, that is about $45 per year in interest — a fee would wipe out most of your gain. Look for accounts with no monthly maintenance fee.
Rates are higher when the Federal Reserve raises its benchmark rate
The Federal Reserve, which is the central bank of the United States, sets a benchmark interest rate that influences what all banks pay. When the Fed raises its rate, banks usually raise the rates they pay on savings accounts within weeks or months. When the Fed lowers its rate, banks usually lower savings rates too.
You do not need to predict what the Fed will do. Just know that if you see a high rate today, it may not stay that high forever. If rates are high and you have money to save, opening an account sooner rather than later makes sense. If rates drop later, you can always move your money to a different bank that is paying more — there is no penalty for closing a savings account and moving your balance elsewhere.
What to do if you find a high rate but the bank is unfamiliar
It is normal to feel nervous about putting money in a bank you have never heard of. The key question is whether it is FDIC-insured (for banks) or NCUA-insured (for credit unions). You can check this on the bank's website or by calling and asking directly. If it is insured, your money is protected up to $250,000 even if the bank fails.
Many of the highest-paying banks are newer online banks that are less well-known than Chase or Bank of America, but they are just as safe if they are insured. Read reviews on sites like Trustpilot or the Better Business Bureau to see what customers say about customer service and how straightforward the bank is to use. But do not let an unfamiliar name stop you from earning a higher rate if the bank is insured and has decent reviews.
Frequently Asked Questions
Can I move my money to a different bank if the rate drops?
Yes. Savings accounts have no early withdrawal penalty or transfer fee. You can move your money to any other bank whenever you want. Some people move their savings every few months to stay with whichever bank is currently paying the highest rate, though that takes time and effort.
What if I need to deposit cash but I use an online bank?
Most online banks let you deposit checks by photographing them with your phone. For cash deposits, some online banks partner with retail locations like CVS or Walgreens where you can deposit cash for free. Check your bank's website to see what options it offers before you open an account.
Is my money safe in an online bank I have never heard of?
If the bank is FDIC-insured, yes — your money is protected the same way it would be at Chase or Bank of America. You can verify FDIC insurance on the bank's website or by calling the FDIC directly. Newer online banks are often insured; check before you open an account.
Do I have to keep a certain amount in the account to earn the advertised rate?
Many banks do require a minimum balance, which varies from $500 to $25,000 or more. Some banks pay their advertised rate on every dollar; others only on balances above the minimum. Read the account details on the bank's website to see what applies to the account you are considering.
What happens to my interest if the bank lowers its rate?
You keep the interest you have already earned. If the rate drops, you straightforward earn less interest on new deposits and on the balance going forward. Your existing balance does not shrink — only the amount of new interest you earn each month decreases.