How much are you earning with your savings account? If it’s below 5%, experts say it may be time for a change. “If you’re opening an account right now and getting a yield less than 5%, you’re leaving money on the table,” says Bankrate Chief Financial Analyst Greg McBride. “There are plenty of high-yield savings accounts that are paying 5% or more, are nationally available; and most have very low or no minimum deposit [requirements].” (See some of the highest-paying savings accounts here.)
Although the Federal Reserve has put a pause on interest rate hikes since last July, competition among banks and credit unions to deliver the most attractive high-yield savings accounts has remained. To date, all of the leaders in February 2024 promise at least 5.3% annual percentage yield, or APY. That said, many of those that made the top 10 come with some fairly restrictive terms, including high minimum deposits requirements, limits on how much money can earn a flashy promoted rate, and membership restrictions.
Regardless, though, all of the leaders are delivering rates well in excess of the roughly half a percent return coming out of many brick-and-mortar banks this year. Here’s why some savings rates are so much higher than the national average, what rates might do in the year ahead and how to find the best top-earning accounts.
How can some banks promise such high rates?
If you’ve recently thought about opening a savings account and checked with some of the biggest names in the business, it’s likely you were pretty underwhelmed with the options. The average national deposit rate for a savings account was just 0.47% APY as of Jan. 16, according to latest data from the Federal Deposit Insurance Corp. (FDIC).
So how can so many financial institutions promise rates well over 5% APY? For one, those with brick-and-mortar locations have high overhead costs, stemming from their physical branches, tellers, and other expenses, says MaxMyInterest CEO Gary Zimmerman. “By contrast, online banks don’t have these costs, and so they’re able to pass along the savings in the form of higher interest rates,” he says. (See some of the highest-paying savings accounts here.)
Another key reason, adds McBride, comes down to demand. “The question isn’t why some banks are paying yields of 5% — after all, it costs the government that much to borrow right now — the question is why are so many banks still paying next to nothing,” he says. “Banks that have plenty of deposits aren’t going to pay up to bring in more, but banks that want the deposits to fuel their lending can easily do so without a host of branches, billboards all over town, or their name on the stadium just by paying a competitive return.”
Where might savings rates go for the rest of 2024?
The Fed started raising its benchmark funds rate in early 2022 to slow climbing inflation following the height of the COVID-19 pandemic. Although inflation today is still above the central bank’s target 2% rate, prices have cooled significantly to 3.4% in December, according to the latest data from the Bureau of Labor Statistics. And the Fed has held interest rates steady since last July.
That said indicators are pointing to the Fed’s first rate cut coming sometime this year, says NerdWallet investing expert and writer Elizabeth Ayoola. “Some finance professionals predict rate cuts at some point this year, and if this happens, we could see a decline in savings account interest rates,” Ayoola says, adding that “if rates stay put, consumers may still enjoy record-high rates and watch their savings compounding.”
Regardless of what the Fed decides to do this year, McBride says the outlook for storing money is likely a positive one. “Yields on savings accounts will pull back this year, especially once the Fed starts cutting interest rates, but the top-yielding online savings accounts will still continue to earn returns well ahead of inflation,” McBride says. “It’ll be another good year for savers.” (See some of the highest-paying savings accounts here.)
10 of the best-paying high-yield savings accounts of February 2024
Here are the 10 best APYs for high-yield savings accounts in February 2024. All of these accounts are protected by either the FDIC or National Credit Union Administration (NCUA), unless otherwise noted. It’s critical to read all of the fine print before opening an account to learn about any potential restrictions or hurdles.
Boeing Employees’ Credit Union: 6.17% APY
Though Boeing Employees CU is paying a generous 6.17% APY for a Member Advantage Savings account, this offer comes with a pretty sizable catch: it only applies to the first $500. Balances above that earn a rate closer to the industry average of 0.50% APY. Another major restriction at this credit union, like with most, is that it’s only available to members. In this case, you must either live, work, worship or go to school in Washington state or other select counties in Oregon and Idaho to qualify.
Digital Federal Credit Union: 6.17% APY
DCU is also paying 6.17% APY, however this rate too is restricted to a relatively low $1,000 balance. You’ll also have to make a minimum deposit of $500 to get started. Any deposits that exceed the $1,000 maximum earn just 0.15% APY, well below the industry average. You’ll also need to meet the membership requirements to join, which is only extended to those who live in select counties of Massachusetts or in a participating condominium community in New Hampshire. Members may also work for a select employer group or belong to a local participating organization.
Andrews Federal Credit Union: 5.75% APY
While this is indeed among the best rates for a savings account this month, only account balances from $0.01 to $1,000 are eligible for the 5.75% APY. Those above that level, meanwhile, accrue interest at one of the lowest available rates at just 0.05% APY. Also, only those who work for one of a dozen eligible employer groups based in either Maryland, Washington D.C., Virginia or New Jersey need apply, as per the credit union’s membership requirements. However, if you are not employed by one of the listed groups here, Andrews FCU states that you can also qualify through the American Consumer Council.
Milli Bank: 5.50% APY
Here’s where most readers will start to find some easier access. That’s because while there are no indeed no fees at Milli Bank, there are also no membership requirements or deposit minimums here, as well. Simply open an account on the Milli app, available on the Apple App Store or Google Play, and you stand to earn a highly competitive 5.50% APY.
Poppy Bank: 5.50% APY
To open a high-earning Poppy Premier Savings account with a competitive 5.50% APY rate, the only thing you’ll need to get started is the minimum $1,000 opening balance requirement. Again, there are no membership requirements to enjoy this top-earning rate. And although savings rate are generally variable, which means they can fluctuate at any given time, this Santa Rosa, Calif-based institution promises savers this high promoted interest rate for 90 days from the time of account opening. Deposits here are limited to $2 million and can only be made through online banking after the account is opened or by visiting a physical branch location.
BrioDirect: 5.35% APY
This option is also fairly strings free. Just deposit at least $4,000 and maintain a $25 balance at this high-yield savings account at BrioDirect, an online brand of Stamford, Connecticut-based Webster Bank, and you’re eligible for this 5.35% APY. Deposits here can be made by either automated clearinghouse (ACH) payment from an existing checking or savings account, or you can fund this account with a check or wire transfer.
My Banking Direct: 5.35% APY
Again, avoid membership requirements found with many offers from credit unions these days with this offer from My Direct Banking. You’ll just need to bring at least $500 at this online service of Flagstar Bank N.A. and you’re eligible for opening a high-yield savings account and start earning a high 5.35% APY. This option comes without monthly fees and all balances greater than $1 earn the promoted interest rate after the initial $500 deposit.
Customers Bank: 5.32% APY
This savings account is one of the least restrictive options for a high-yield savings account on the market today. You’ll only need $1 to start earning a high 5.32% APY. There’s also no balance restrictions, membership requirements, and no monthly maintenance fees. Also, feel free to add as much cash you want to this account and still earn an industry-leading savings rate.
RBMAX: 5.32% APY
The rate at this RBMAX savings account comes in at a high 5.32% APY. This too is a relatively strings-free option and just requires depositors to make a $1 minimum opening deposit.
Select Bank: 5.32% APY
This online-only high-yield savings account also only requires $1 to open an account and delivers a highly competitive 5.32% APY. Otherwise, there are no fees and a fairly strings free set of rules to get started.