Saving money is an important habit and the foundation of sound financial planning. However, where you invest your savings is also important. Today’s savings rates vary widely, but some of the best accounts offer interest rates of 5% per annum and even more. Let’s take a look at the best savings rates currently and where you can find them.
What are the best savings interest rates today?
Historically, interest rates on savings accounts have been high. However, interest rates on traditional savings accounts tend to be low compared to those on high-yield savings accounts.
For example, the average savings interest rate is only 0.45%, while the best savings rates are generally around 4.5% to 5% per annum. As of August 14, 2024, the highest savings interest rate offered by our partners is currently 5.50%.
Here’s a look at some of the best savings rates currently offered by our verified partners:
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Related: The 10 best high-yield savings accounts in 2024>>
Will savings interest rates fall soon?
Interest rates on deposit accounts – including interest rates on savings accounts – are tied to the federal funds rate. This is the target interest rate set by the Federal Reserve. When it raises its federal funds rate, interest rates on deposit accounts usually rise as well. And conversely, when the Fed lowers its interest rate, interest rates on deposits fall.
The Fed has maintained its current interest rate of 5.25-5.50% since July 2023. However, as inflation eases, experts expect the Fed to begin cutting rates later this year, likely in September.
If the Fed cuts interest rates, savings rates will most likely fall as well. This means that now may be the last chance for savers to take advantage of today’s higher interest rates.
Read more: Bond vs. high-yield savings account: Which is better to beat inflation?
Is now a good time to put your money into a savings account?
Choosing where to invest your money is an important decision, and there are a few factors to consider when evaluating your options. A high-yield savings account might make sense if you’re looking for a safe place to keep short-term savings while earning a solid return. Here are some key considerations:
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Interest rates: One of the most important features of a savings account is the interest rate. It’s important to shop around and compare the best deals to ensure your money grows over time. Given that savings rates are likely to fall in the near future, you can take advantage of historically high interest rates now by opening a high-yield savings account.
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Goals: Today’s high-yield savings accounts offer interest rates we haven’t seen in more than a decade. However, savings rates still don’t match the average returns in the stock market. If you’re saving for a long-term goal like retirement, a savings account probably isn’t the best place to put your money because your balance won’t grow at a pace that will allow you to reach your goal. However, if you’re saving for a financial emergency, a down payment on a house or car, gifts for the holidays, or another short-term goal, a savings account is a great place to keep those funds.
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Accessibility: Certain types of accounts and investments may offer higher returns than a savings account, but make it harder to access your money in an emergency. For example, if you put your savings in a certificate of deposit (CD) and need to access the money before the maturity date, you may incur an early withdrawal penalty. So if you want to access your savings when you need it, a high-yield savings account is probably a better choice.
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Security: In most cases, savings accounts are insured by the FDIC up to the federal limit. You also can’t lose money due to market fluctuations, making them a low-risk option.
Read more: Can you negotiate a higher savings account interest rate with your bank?
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