February 6, 2024 – Forbes Advisor

February 6, 2024 – Forbes Advisor

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Savings account rates were mixed compared to a week ago. You can now earn 5.84% or more on your savings.

Shopping for an account where you can save for a rainy day or retirement? Here’s a look at some of the best savings rates you can find today.

Related: Compare the Best High-Date Online Savings Accounts

Traditional Savings Account Rates Today

Traditional savings accounts, called “statement savings accounts” within the banking industry, don’t pay much interest. That’s starting to change, thanks to the Fed’s campaign to raise interest rates to curb inflation.

The current top rate on a standard savings account with a $2,500 minimum deposit requirement is 5.84%, according to data from Curinos. If you’ve got a basic savings account with a rate in the general area, you’ve found a good deal. A week ago, the best yield was also 5.84%.

The current average APY for a traditional savings account is 0.23%, Curinos said. The APY, or annual percentage yield, shows the actual return your account will earn in a year. This includes compound interest, which is interest that builds on the interest you already have in your account.

High-Yield Savings Account Rates Today

High-yield savings accounts usually pay higher interest than conventional savings accounts. But the catch is that you have to meet tough requirements set by the bank or credit union. Usually, that means making a large deposit to open the account.

On high-yield accounts that require a minimum deposit of $10,000, the best interest rate today is 4.51%. That is unchanged from a week ago.

The average APY for accounts is now 0.23% APY, roughly the same as a week ago.

On high-yield savings accounts with a minimum opening deposit of $25,000, the highest rate currently offered is 4.89%. You’ll be fine if you find an account that offers a rate close to 4.89%. Last week at this time, the best rate was the same 4.89%.

The current average is 0.25% APY for a high yield account with a $25,000 minimum deposit. That’s the same as last week’s APY.

How Much Does Savings Account Interest Change?

Interest rates on savings accounts often fluctuate in response as other rates change throughout the economy. Savings rates are primarily influenced by rate moves by the Federal Reserve, and the central bank recently raised its benchmark federal funds rate in an attempt to control inflation.

But while financial institutions are usually quick to raise credit card rates and other borrowing costs as the Fed raises rates, they tend to hold back when it comes to raising interest on savings. Rates on savings accounts are slowly rising, and are likely to continue throughout 2023.

How High is the Savings Rate?

It’s hard to say—it depends on the path of inflation and the overall economy.

The highest interest rates in recent history were seen in the early 1980s when the Fed raised the federal funds rate to over 19%. That’s the answer to record-breaking inflation with prices rising at a rate of more than 14% annually.

In the early 1980s, the average five-year CD paid nearly 12%, compared to less than 2% today, according to Bankrate data. Savings rates eventually fell as inflation cooled and the federal funds rate was lowered.

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Curinos determines the average fees for savings accounts by focusing on those intended for personal use. Certain types of savings accounts—such as relationship-based accounts and accounts designed for youth, seniors and students—are not considered in the calculation.

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