Average Savings Account Interest Rates Of November 2023

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The average interest rate on savings accounts marched steadily upward in 2023, increasing from 0.33% APY in January to 0.46% APY as of November 20, 2023, according to FDIC data. A $10,000 deposit at the current average savings rate of 0.46% would grow to $10,046 after one year.

Average Interest Rate of a Savings Account

The data above is accurate as of Nov. 20, 2023.

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APY Comparison

When shopping for a savings account, compare APYs, or annual percentage yields. More frequent compounding helps your balance grow because you earn interest on your interest more often. The APY takes the compounding schedule into account, so it gives you the most accurate way to compare how much you’ll earn with different accounts. If you’re considering an account that pays 2.50% APY and another one that offers 2.40% APY, you can trust that you’ll earn more money with the first account because it has a higher APY. In addition to APYs, make sure to look for any minimum or maximum balance requirements. Some accounts may only earn the stated APY on a portion of the balance, while others may require you to maintain a minimum balance to earn the APY.

Interest Rates for Checking and Savings Linked Accounts

Certain banks also offer linked checking and savings accounts for easier transfers. The savings and checking accounts in these arrangements may both pay interest, or you may only earn interest on your savings. Either way, since savings accounts pay higher APYs it’s best to keep most of your balance in savings when not needed for bills. Some larger banks also offer additional relationship benefits, such as a higher interest rate, for customers who open and link both a checking and savings account. Relationship rates might also require you to have a mortgage or an investment account at the institution.

What Affects Savings Rates?

In each FOMC meeting, the Federal Reserve sets the federal funds rate, which banks use when borrowing money from each other overnight to maintain reserves. Changes to this rate cascade through the financial sector, driving increases and decreases in consumer savings rates. While Federal Reserve policies impact average savings rates, individual banks and credit unions make rate decisions based on a number of other factors. The Fed began raising rates in March 2022 in response to high inflation. After a year and a half of rate increases, from 0.00% to 5.25%, the Consumer Price Index cooled and the Fed decided to hold rates steady in its September 2023 session. While the rising Fed rate has caused savings rates to increase as well, many traditional banks have kept their rates steady. Online banks and credit unions are more likely to offer competitive rates that keep pace with Fed rate increases.

What Is a Good Rate for a Savings Account?

Good savings account interest rates are usually several times higher than the national average savings rate. As of November 2023, the average saving rate published by the FDIC is 0.46%, so a good rate would be over 1.00% APY. It’s also possible to find rates 10 times higher, as many of the best savings accounts pay 4.50% to 5.00% APY. By contrast, some of the largest national banks keep savings rates at 0.01% APY. The FDIC sets a national rate cap, and few, if any, savings account rates exceed it. This maximum rate stands at more than 12 times the average savings interest rate.

How To Get the Best Savings Rate

  • Make your money work harder for you while you save by following some of these tips.
  • Research savings accounts at different institutions from where you currently bank.
  • Online-only banks may offer higher rates, but look at large banks with promotional offers as well.
  • Consider NCUA-insured credit unions if you want higher rates and local branch banking.
  • Look for no-fee accounts to keep your savings growing.
  • Be realistic about the balance you intend to maintain to avoid unnecessary fees some banks charge if you go below a minimum balance.
  • Make sure you can live with the number of withdrawals your account allows per month.

Alternatives to Savings Accounts

Savings accounts offer easy access to funds you set aside for later, but it’s worth considering alternatives such as interest-bearing checking accounts, certificates of deposit (CDs), and money market accounts (MMAs).

Savings vs. Checking Rates

Standard checking pays no interest, but you will earn a bit on your balance with interest checking accounts. While you’re likely to get a higher rate on a savings account, checking accounts allow for more frequent withdrawals and come with a debit card and check-writing capabilities.

Savings Rates vs. CD Rates

CDs provide another FDIC-insured way to earn interest on your savings, and they tend to earn much higher rates. Depending on the length of time until you need your money, you could earn three to four times as much, on average, by putting it in a CD instead of a savings account. You’re paid a fixed rate for the term of the CD, as opposed to the variable rates savings accounts earn. Keep in mind that CDs usually come with penalties for withdrawing cash before maturity. You should also find out in advance what happens when your CD matures. Some CDs automatically roll over into a new CD, while others simply stop earning interest.

Savings Rates vs. MMAs

Money market accounts provide a hybrid between a savings and checking account. Average interest rates for MMAs hover a bit above standard savings account averages, but like a checking account, these accounts usually offer an ATM card or check-writing capabilities. That said, MMAs tend to have higher minimum deposit and balance requirements.

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