The best savings account rates for September 2024: Earn over 5% on your money

Advertiser Disclosure: Content provided by Red Ventures. Fox Business and its content partners earn compensation from the affiliate companies that appear below. This content does not include all available financial offers, and compensation may impact how and where links appear in the content.

Savings account rates have been high for the past couple of years, so now is a good time to take advantage. The average savings account interest rate is 0.61% as of August 2024. But you can do much better with a high-yield savings account, which offers higher rates to help your money grow faster. 

The best high-yield accounts right now are offering APYs above 5.00%. Here are some of the top rates on the market right now.

Rates are up to date as of August 2024. 

These accounts represent some of the highest yields available nationwide, and they all come from reputable, FDIC-insured banks. That means your deposits are protected up to $250,000 per person, per institution.

Understanding APY vs. APR

When comparing savings account rates, it's important to understand the difference between APY and APR. APY, or annual percentage yield, represents the total amount of interest you'll earn on your savings over the course of a year, assuming you don't make any additional deposits or withdrawals. 

It takes into account the effect of compound interest, which is when the interest you earn is reinvested and starts earning interest of its own. APR, or annual percentage rate, is the simple interest rate without accounting for compounding. 

For savings accounts, APY is the more relevant figure because it gives you a more accurate picture of your actual earnings. 

Here's an example to illustrate the difference: Let's say you deposit $10,000 into a savings account that earns 5% APR, compounded monthly. After one year, you'll have earned $511.62 in interest, for an ending balance of $10,511.62. 

That translates to an APY of 5.12% – slightly higher than the stated APR because of the effect of compounding.

What affects savings account rates?

Savings account rates can vary widely from bank to bank and over time. Here are some of the key factors that influence the rates banks offer:

Federal reserve policies

The Federal Reserve, the central bank of the United States, sets the federal funds rate – the rate at which banks lend money to each other overnight. 

When the Fed raises rates, as it has been doing aggressively over the past year to combat inflation, banks tend to raise their own rates on savings accounts and other deposit products in response. Conversely, when the Fed lowers rates, savings account rates tend to fall.

Bank competition

Banks are always competing with each other for customers' deposits. One way they attract new accounts is by offering higher interest rates than their competitors. 

This is especially true for online banks, which tend to have lower overhead costs than traditional brick-and-mortar institutions and can pass those savings on to customers in the form of higher yields.

Account balance

Some high-yield savings accounts offer tiered interest rates based on your account balance. For example, you might earn a higher APY on balances over $10,000 or $25,000. This is an incentive for customers to keep more money on deposit with the bank.

Promotional rates

Some banks offer temporary promotional rates to attract new customers or encourage existing ones to deposit more money. 

These rates may be significantly higher than the bank's standard APY, but they typically only last for a limited time – often a few months to a year. After the promotional period ends, the rate will revert to the bank's standard APY.

How often do savings account rates change?

Unlike certificates of deposit (CDs), which lock in a fixed interest rate for a set term, savings account rates are variable and can change at any time. 

Most banks reserve the right to adjust their rates daily, though, in practice, they tend to change rates much less frequently – typically every few weeks or months in response to market conditions and Federal Reserve actions. 

That means the top rate today may not be the best deal a few months from now. To make sure you're always earning the highest possible yield on your savings, it's a good idea to check rates regularly and be prepared to move your money if you find a better offer elsewhere.

What to look for in a savings account 

While the interest rate is certainly one of the most important factors to consider when choosing a savings account, it's not the only one. Here are some other key features and benefits to look for:

No monthly fees

Some savings accounts charge monthly maintenance fees that can eat into your interest earnings. Look for accounts with no monthly fees, or ones that waive the fee if you maintain a minimum balance or set up direct deposit.

Low or no minimum balance requirement

Some high-yield savings accounts require a minimum opening deposit or ongoing balance to earn the advertised APY. If you're just starting to build your savings, look for accounts with low or no minimum requirements so you can earn a competitive rate on any balance.

Easy access to your money

One of the main benefits of a savings account is that your money is easily accessible if you need it. Look for accounts that let you easily transfer money to and from your other bank accounts, and consider whether you want ATM access or check-writing privileges for added flexibility.

Automatic savings tools

Some high-yield savings accounts come with built-in tools to help you save more automatically. For example, you may be able to set up recurring transfers from your checking account, or round up your debit card purchases to the nearest dollar and deposit the spare change into savings.

Convenient mobile and online banking

If you prefer to bank online or on your phone, make sure the savings account you choose offers a user-friendly website and mobile app. Features like mobile check deposit, easy money transfers, and account alerts can make it easier to manage your savings on the go.

Savings account alternatives

While high-yield savings accounts can be a great option for many people, they're not the only way to earn a competitive return on your money. Here are a few alternatives to consider:

Money market accounts

Money market accounts are similar to savings accounts, but they often come with check-writing privileges and higher balance requirements. Some money market accounts also offer higher interest rates than savings accounts, though they may require a larger minimum deposit to earn the top rate.

Certificates of deposit (CDs)

If you don't need immediate access to your money and want to lock in a guaranteed return, a CD could be a good choice. CDs typically offer fixed interest rates for terms ranging from a few months to several years.

In exchange for leaving your money untouched for the full term, you'll generally earn a higher rate than you would with a savings account. However, if you withdraw your money early, you'll usually face a penalty.

Cash management accounts

Some brokerage firms and robo-advisors offer cash management accounts that function like a hybrid checking and savings account. 

These accounts often come with debit cards, check-writing privileges, and FDIC insurance, along with competitive interest rates. However, they may require you to open a brokerage account or meet other eligibility requirements to qualify.

How much can you earn with a savings account? 

To illustrate the power of a high-yield savings account, let's look at a real-life example. 

Suppose you have $10,000 to save for a down payment on a house. If you put that money in a traditional savings account earning the national average of 0.57% APY, you'd earn about $57 in interest after one year. 

Now suppose you instead put that $10,000 into one of the top high-yield savings accounts earning 5.30% APY. After one year, you'd have earned about $530 in interest – almost 10 times more than with the traditional savings account. 

And if you left that money in the account for five years without making any additional deposits, you'd have over $13,000 – an extra $3,000 just from choosing a high-yield account. 

Of course, these calculations assume that interest rates stay constant over time, which is unlikely given the current economic climate. If rates fall in the future, your earnings will be lower as well. But by choosing a high-yield account now while rates are at historic highs, you can maximize your savings growth while still maintaining full liquidity and FDIC protection.

Frequently asked questions about high-yield savings accounts

Still have questions about high-yield savings accounts? Here are answers to some of the most common queries:

What is a high-yield savings account?

A high-yield savings account is a type of savings account that offers significantly higher interest rates than traditional savings accounts. These accounts are typically offered by online banks and credit unions, which have lower overhead costs than brick-and-mortar institutions and can pass those savings on to customers in the form of higher yields.

Are high-yield savings accounts safe?

Yes, high-yield savings accounts offered by reputable banks and credit unions are just as safe as traditional savings accounts. They are typically FDIC-insured up to $250,000 per depositor, per institution, meaning your money is protected even if the bank fails.

Do high-yield savings accounts have any fees or requirements?

Some high-yield savings accounts have minimum balance requirements or monthly fees, but many do not. Be sure to read the fine print and choose an account with no or low fees and minimum requirements that you can easily meet.

Can you lose money in a high-yield savings account?

No, you cannot lose money in a high-yield savings account as long as it is FDIC-insured and you don't exceed the $250,000 limit. Your principal balance will never decrease, and you'll continue to earn interest on your balance even if rates change over time.

The bottom line

If you're looking for a safe, liquid place to park your savings and earn a competitive return, a high-yield savings account is hard to beat. 

With interest rates at historic highs, now is an excellent time to shop around and find the best deal for your needs. Just remember that rates can change over time, so it's important to stay on top of the market and be prepared to move your money if you find a better offer elsewhere. 

And while a high interest rate is certainly important, be sure to also consider factors like fees, minimum requirements, access options, and customer experience when choosing an account. By doing your research and choosing wisely, you can make your money work harder for you and reach your savings goals faster with a high-yield savings account.

Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.