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Average bank account interest rates

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  • According to the FDIC, the average savings account earns 0.46% APY and CDs earn 0.22% to 1.81% APY.
  • Online banks tend to offer higher interest rates than the average savings account.
  • Keep in mind that rates vary between banks and can fluctuate over time.

The Federal Deposit Insurance Corporation tracks the interest rates offered by banks for different types of accounts.

Here are the average bank interest rates for savings accounts, CDs, money market accounts, and interest-bearing checking accounts.

Current state of interest rates in 2024

The inflation rate has fallen significantly since 2022 but still has not reached the 2% target set by the Fed. This means that interest rate cuts are likely on the horizon, although it is difficult to predict when and by how much they will fall.

For now, interest rates on deposit accounts remain high. This is good news for savers, who can find several savings accounts paying a generous APY (annual percentage yield) of 5% or more.

Average interest rates

Savings accounts

According to FDIC data, the average interest rate for savings accounts is 0.46% APY, but most online savings accounts pay significantly more than traditional bank savings accounts.

High-yield savings accounts, which work the same as a traditional savings account but earn more interest, are a great way to make your money grow.

Here are some popular online banks that offer high-yield savings accounts and their interest rates:

Check accounts

Not all checking accounts earn interest, but a few accounts offer this benefit. On average, interest-bearing checking accounts earn 0.08% APY.

Many banks offer higher rates for larger balances or qualifying activity, such as a certain number of monthly debit card transactions or recurring deposits.

Here are the rates offered by some popular interest checking accounts:

Money market accounts

Money market accounts may earn more than savings accounts, depending on the financial institution. However, money market accounts function more like checking accounts; many come with ATM access, debit cards and checks.

The average rate for money market accounts is 0.66% APY, according to the FDIC.

Here are some popular MMA fares today:

CD

Certificates of deposit, or CDs, are a good way to grow your money risk-free. Your money is locked in for a certain period of time, usually ranging from one month to five years.

Although withdrawing money before the end of the term comes with an early withdrawal penalty, these accounts benefit from higher interest rates on average than traditional savings or money market accounts.

CD rates depend on economic conditions, but tend to be higher over the long term. One of the big advantages of CDs is that once your money is deposited, the interest rate cannot change, unlike a savings or money market account.

Here is the average bank interest rate for a $10,000 CD for various terms, according to FDIC data:

As with savings and money market accounts, it is possible to find much higher than average interest rates for CDs at online banks.

Here are the current prices on several popular CDs:

How Interest Rates Affect Your Money

High interest rates are attractive to savers, but they can be a challenge for borrowers. Taking out a mortgage to buy a house, for example, when interest rates are high means you end up with a higher monthly payment. Alternatively, you can wait until rates drop and keep your cash flow growing risk-free in a savings or money market account.

Factors influencing bank account interest rates

Federal Reserve Policies

The Fed determines the interest rate that banks charge each other for lending money, which in turn determines the rate that banks charge their customers. When the Fed lowers its target rate, banks typically do the same, lowering rates on deposit accounts and loan products.

Rate changes take place at Fed meetings involving the Federal Open Market Committee, which occur at least eight times a year.

Inflation rate

The Fed makes its decisions based, in part, on inflation. When the inflation rate exceeds the Fed’s annual target of 2%, it may decide to increase interest rates to discourage spending, and therefore borrowing. Conversely, when inflation is too low, the Fed can lower rates to stimulate the economy.

Bank-specific factors

The average bank interest rate varies depending on the type of account you are considering. Depending on the account you want to open, other factors may affect the interest rate you’ll see, such as the daily account balance or opening deposit.

It is also worth noting that interest rates vary between banks. You may find that the best online banks have higher interest rates on savings accounts than the bank with a branch down the street.

How to find the best bank interest rates

It’s important to compare accounts to get the best interest rate, but it’s just as important to make sure the account you’re considering doesn’t have ongoing bank charges that could reduce your income.

Interest rates for deposit accounts, such as checking and savings, and for loans are constantly changing. They can change at any time, and the account with the highest interest rate today may not be the account with the highest interest rate next month. Do a quick search every few months to make sure your interest rate is still competitive.

Bank Account Interest Rates FAQ

Rates vary depending on the economic climate, but in general, anything that matches or exceeds the inflation rate is good.

Banks must have a significant amount of liquidity to fund loan products, and part of this comes from customers’ savings accounts. To encourage customers to save, financial institutions offer higher interest rates.

Banks generally do not change interest rates on deposit accounts, but customers with very high balances or significant assets in the institution may have luck in negotiations.

Online banks reduce costs by not operating physical branches. In turn, they are able to offer higher rates on checking and savings accounts to attract customers.

Consider the cause of the interest rate change. Several factors determine a bank’s interest rate on savings products, such as high-yield accounts and CDs, including decisions by the Federal Reserve, the U.S. banking authority. If the Fed cuts its target federal funds rate, most banks will follow suit, which could make it difficult to find an account paying a rate comparable to your previous rate.