Saving money is an important habit and the foundation of a solid financial plan. However, where you put your savings is also important. Today’s savings interest rates vary widely, but some of the best accounts are offering rates of 5% APY and even higher. Let’s take a look at the best savings interest rates today and where to find them.
What are the best savings rates today?
Historically speaking, savings account interest rates have been high. That said, the rates on traditional savings accounts pale in comparison to those offered for high-yield savings accounts.
For example, the average savings account rate is just 0.46%, while the best savings interest rates are generally around 4.5% to 5% APY. As of May 29, 2024, the highest savings account rate offered by our partners is currently 5.15%.
Here is a look at some of the best savings rates available today from our verified partners:
Related: 10 best high-yield savings accounts for May 2024>>
Will savings interest rates go down soon?
Deposit account rates — including savings rates — are tied to the federal funds rate. This is the target interest rate set by the Federal Reserve; when it increases its target rate, deposit account rates usually increase. And conversely, when the Fed lowers its rate, deposit rates fall.
The Fed has maintained its current rate of 5.25%–5.50% since July 2023. However, as inflation cools, experts agree that the Fed will begin to cut rates later this year, likely in November.
If the Fed does lower interest rates, savings interest rates will most likely begin to come down as well. That means now might be the last chance for savers to take advantage of today’s higher rates.
Read more: I bond vs. high-yield savings account: Which is better for beating inflation?
Is now a good time to put your money in a savings account?
Choosing where to put your money is an important decision, and there are a few factors you should consider when evaluating your options. A high-yield savings account could make sense if you’re looking for a secure place to hold shorter-term savings while earning a solid return. Here are a few 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 offers to ensure your money will grow over time. Considering that savings rates will likely drop in the near future, opening a high-yield savings account now will allow you to take advantage of historically high rates.
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Goals: Today’s high-yield savings accounts offer rates we haven’t seen in more than a decade. That said, savings rates still don’t match average returns for 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, since your balance won’t grow at a pace that will allow you to reach your target. However, if you’re saving for a financial emergency, a down payment on a home or car, gifts for the holiday season, or another short-term goal, a savings account is a great place to hold those funds.
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Accessibility: Certain types of accounts and investments may provide higher returns than a savings account, but may make it difficult to access your funds in a pinch. For example, if you put your savings in a certificate of deposit (CD) and need to access the money before the maturity date, you could be subject to an early withdrawal penalty. So, if you want to be able to dip into your savings as needed, a high-yield savings account is likely the better choice.
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Security: In most cases, savings accounts are insured by the FDIC up to the federal limit. They also can’t lose money due to fluctuations in the market, making them a low-risk option.