Banks and credit unions with the highest APY rates today
The banks and credit unions offering the highest APY change week to week, so there is no single answer that stays true for long. What matters is knowing where to look and how to compare them fairly.
Online banks currently tend to offer higher APY than brick-and-mortar banks because they have lower overhead costs. As of early 2024, some online savings accounts and money market accounts are paying between 4.5% and 5.35% APY, while traditional banks often pay under 0.5%. Credit unions sometimes match or exceed online bank rates through their own high-yield savings products, though this varies by institution and membership may be able to access.
The highest rates are usually found in savings accounts, money market accounts, and certificates of deposit (CDs). Each type has different rules about how long your money stays locked in and how often you can withdraw it. Checking accounts almost never offer competitive APY, even at online banks.
Key Takeaways
- Online banks typically offer higher APY than traditional banks because they spend less on physical branches and staff.
- APY rates change frequently, so the highest rate today may not be the highest next month — compare current offers before moving your money.
- Savings accounts, money market accounts, and CDs offer different APY rates and different rules about when you can access your money.
- The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account type per bank, so verify coverage before depositing large amounts.
- Credit unions may offer competitive rates to members, but you must meet membership requirements first.
How to find current APY rates and compare them
Start by visiting the websites of online banks directly and looking for their savings account or money market account pages. Most display the current APY prominently. Write down the rate, the minimum deposit required, and any fees for early withdrawal or account maintenance.
Then check your own bank's website and any credit unions you belong to or are may be able to access to join. You may find that staying put costs you money, or you may find a competitive rate you did not know about.
Use a rate comparison tool like Bankrate, DepositAccounts, or the Federal Reserve's own resources to see multiple institutions side by side. These tools update frequently but are not real-time, so always verify the rate on the bank's own website before opening an account. A rate listed as 5.2% last week may have dropped to 4.8% by the time you check.
Why APY rates vary so much between institutions
The Federal Reserve sets a target interest rate range that influences what banks pay on deposits. When the Fed raises its rate, banks have more room to pay higher APY. When the Fed cuts rates, APY across the industry falls. This is why the highest available rate today might be 5.0% and six months from now might be 3.5%.
Within that environment, online banks pay more because they have lower costs. A traditional bank with hundreds of branches and thousands of employees spends far more money to operate than an online bank with a handful of data centers and customer service staff. That cost difference gets passed to depositors as lower APY.
Banks also use APY as a tool to attract deposits when they need cash. A bank that is growing fast and needs more money to lend out may offer a promotional rate higher than its competitors. Once the bank has enough deposits, it may lower the rate back down.
Savings accounts versus money market accounts versus CDs
A savings account lets you withdraw money whenever you want, though federal rules once limited you to six withdrawals per month (this rule is no longer enforced, but some banks still have their own limits). APY on savings accounts is usually lower than on CDs because the bank cannot count on your money staying put. Online banks currently offer savings account APY between 4.0% and 5.35%.
A money market account is a hybrid. It works like a savings account but usually requires a higher minimum deposit and may offer slightly higher APY in exchange. Some money market accounts come with a debit card or checks, which savings accounts do not. The trade-off is that you may face fees if your balance drops below the minimum.
A certificate of deposit (CD) locks your money in for a set period — typically three months, six months, one year, or five years. In exchange, the bank pays you a higher APY because it knows exactly how long it will have your money. If you withdraw before the term ends, you pay a penalty, usually equal to a few months of interest. CDs currently offer APY between 4.5% and 5.5%, depending on the term length.
Choose a savings account if you need access to your money. Choose a CD if you have money you will not need for months or years and want to lock in a higher rate.
What happens when rates drop
When the Federal Reserve cuts interest rates, banks lower the APY they offer on savings accounts and money market accounts within days or weeks. CDs are different — once you lock in a rate, it does not change, even if rates fall. This is why locking in a high CD rate during a high-rate environment can be valuable.
If you have money in a savings account earning 5.0% and rates drop to 3.0%, your bank will lower your APY to match the new market. You do not lose the money you already earned, but future interest accrues at the lower rate. At that point, you can either accept the lower rate or move your money to a bank still offering a higher rate.
This is why comparing rates regularly matters. Every few months, check whether your current bank is still competitive. If not, opening a new account at a higher-paying bank takes about 10 minutes online.
FDIC insurance and deposit limits
The Federal Deposit Insurance Corporation (FDIC) protects your deposits if a bank fails. The coverage limit is $250,000 per depositor, per bank, per account type. This means if you have $250,000 in a savings account at Bank A and $250,000 in a savings account at Bank B, both are fully protected. But if you have $300,000 in one savings account at one bank, only $250,000 is covered.
Money market accounts and CDs are also FDIC-insured up to $250,000 each. Checking accounts are insured separately, so you can have $250,000 in checking and $250,000 in savings at the same bank and both are covered.
Credit unions use a similar system called NCUA (National Credit Union Administration) insurance, also capped at $250,000 per account type per institution. Before moving a large sum to a new bank, verify that your full balance will be covered.
Red flags when comparing APY offers
Watch for promotional rates that explore only to new customers or only for the first few months. A bank might advertise 5.5% APY, but that rate may drop to 2.0% after 90 days. Read the fine print on the bank's website or call customer service to ask how long the promotional rate lasts.
Be cautious of banks that require you to set up direct deposit or make a certain number of debit card transactions to earn the advertised rate. These conditions are straightforward to miss and can disqualify you from the rate you thought you were getting.
Avoid any bank that charges a monthly maintenance fee on a savings account. Reputable online banks do not charge these fees. A $10 monthly fee erases years of interest gains on a small balance.
Frequently Asked Questions
Can I move my money between banks without losing interest?
Yes. When you move money from one bank to another, you do not lose the interest you already earned. You will stop earning interest at the old bank the day you withdraw, and start earning at the new bank the day you deposit. There is no penalty for moving savings or money market accounts, though CDs charge an early withdrawal penalty if you cash them out before the term ends.
What is the difference between APY and APR?
APY (annual percentage yield) includes the effect of compounding — interest earned on your interest. APR (annual percentage rate) does not. For savings accounts and CDs, APY is the number that matters because it shows what you actually earn. APR is used for loans and credit cards.
If I open a CD at 5.2% APY, is that rate locked in?
Yes. Once your CD matures (the term ends), the bank will offer you a new rate, which may be higher or lower. But during the CD term, your rate does not change. This is why CDs are useful when rates are high — you lock in that rate for months or years.
Do I have to pay taxes on the interest I earn?
Yes. Interest earned on savings accounts, money market accounts, and CDs is taxable income. The bank will send you a 1099-INT form at the end of the year showing how much interest you earned. You report this on your tax return. This is separate from the APY rate itself — the APY is what the bank pays you, and taxes are what you owe on that income.
Why would I ever use a bank that pays less APY?
Convenience and trust. If you use a traditional bank for checking, loans, and credit cards, keeping your savings there means one login and one customer service number. Some people also prefer having a physical branch to visit. The cost of that convenience is lower APY, but for some people it is worth it.