Elect for winning returns of up to 5.10% APY to grow your money faster — Nov. 5, 2024

U.S. Election Day is upon us. If you haven’t yet voted, you still have time to find your local polling place and cast your ballot for the important presidential race, as well as state and local elections that affect the way you live, work and plan for your future.

And while savings rates are easing down amid election news and this week’s Federal Reserve meeting — when the Fed’s expected to lower its benchmark interest rate by another quarter point — you still have time to upgrade from simple savings to a high-yield account paying out more than 10 times the 0.45% national average at your neighborhood bank.

These high-powered accounts promise to outpace your everyday savings without the monthly fees or minimums of a traditional account, allowing every dollar you save to work harder and grow faster. Robust online and digital banking tools make quick work of connecting to your checking accounts for seamless money management, no matter where you bank. And they’re FDIC-insured with ready access to your cash, whenever you need it — whether to boost your emergency savings, build your everyday reserves or reach a short-term financial goal.

With many HYSAs still earning more than 5% APY, the time to get ahead of lower rates is right now. Here’s where to find the best of today’s FDIC-insured high-yield accounts offering safe, fast growth with signup in minutes.

💰 Today’s best CDs: Act fast to lock in up to 4.70% APY before Thursday’s expected Fed cut

High-yield savings rates for November 5, 2024

Today’s highest savings rates are at FDIC-insured digital banks and online accounts paying out rates of up to 5.10% APY with no minimums at Patriot Bank, Poppy Bank and other trusted providers as of Tuesday, November 5, 2024.

These digital accounts and online-only banks may not be familiar as American Express, Capital One or Discover, though each partners with an FDIC-insured bank to offer deposit accounts that are insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) — just like those at your neighborhood bank.

And while the Federal Reserve once limited transactions and withdrawals from high-yield savings accounts to six a month, that limitation is permanently suspended in the wake of the pandemic, with many banks no longer restricting how often you can move money in and out of your account.

Dig deeper: How to find and open a high-yield savings account in 5 steps

Traditional savings account rates

The Federal Deposit Insurance Corporation tracks monthly average interest rates paid on savings and other deposit accounts, like certificates of deposit, that offer insight into the interest you might receive at your local bank or on traditional accounts.

Here’s how FDIC national deposit rates on a $10,000 minimum deposit compare between September and October 2024 on traditional low-interest deposit accounts.

Pulling back on average rate updates over the past year shows minimal movement for traditional savings accounts with bigger movement on 12-month CD terms.

The FDIC is an independent government agency charged with maintaining stability and public confidence in the U.S. financial system and providing insurance on consumer deposit accounts.

What is a savings account?

A savings account is a type of deposit account designed for storing money you don’t expect to use for regular expenses, like paying bills or buying groceries. These accounts don’t typically offer check-writing privileges or debit cards, though you can find limited checking with a high-yield money market account.

Saving accounts earn you interest on your balance — anywhere from a modest 1% APY with a traditional account to a lucrative 4% APY and higher for high-yield accounts — compounding what you earn and helping your savings to grow faster.

Simple interest vs. compound interest

Simple interest refers to the interest you earn on your principal balance only. Let’s say you invest $10,000 into an account that pays 3% in simple interest. After three years, you’d have earned $900 in interest — $300 each year — for a total of $10,900 in your account.

Now let’s say you invest $10,000 in an account that pays 3% compounded annually. At the end of the first year, you’d have earned $300 in interest, for a total of $10,300 in your account. If you left your account as is for another year, you’d have earned another $309 in interest — $300 on your initial deposit and another $9 on the interest reinvested from year one — for a new total of $10,609. Year three, you’d earn another $318.27 in interest — $300 on your initial deposit and another $18.27 on the interest you earned. At the end of the same three years, you’d have earned $927.27 in interest for a total of $10,927.27 in your account — and that’s without additional contributions to that initial $10,000.

Savings accounts can compound daily, monthly or quarterly, depending on the bank and account. The more frequent the compounding, the more you can earn — so read your account’s disclosure statements to understand how often your interest is compounded and credited to your account. Larger balances over longer periods can add up to even more significant savings.

Dig deeper: What is compound interest? How compounding works to turn time into money

High-yield savings accounts vs. traditional savings accounts: What’s the difference?

There’s no official definition for either of these accounts. Rather, each is a type of deposit account that can earn you incremental interest on your balance, helping you to grow your savings. The money you save in these accounts is federally insured up to $250,000 by the FDIC or the NCUA for up to $250,000 per person, per account, protecting your nest egg against risk.

Your earning potential is the most important difference between an HYSA and a traditional savings account. A high-yield savings account can earn you significantly more interest than a traditional savings account, with digital banks and online accounts offering the strongest rates, passing along overhead savings in the form of high yields — more than 10 times the national average when compared to a traditional account. The best of these digital banks and online accounts come with no fees and no minimum deposits — like SoFi Checking and Savings that pays up to 4.30% APY — removing any challenges to maintaining your account over the long term.

Dig deeper: High-yield savings vs. traditional savings account: Why it’s worth the switch

How to compare the best savings accounts

Digital banking opens up more competitive rates and fewer fees than your neighborhood brick-and-mortar bank, and robust apps make it easy to keep an eye on your balance, manage money among everyday accounts and deposit checks from your smartphone or tablet.

Yet while it’s tempting to choose an account based only on its highest advertised APY, interest rates on savings accounts are variable — meaning rates can fluctuate after you open one and change over time. And you could be earning a lower rate if the Fed cuts its benchmark interest rate later this year.

Instead, look for an account that fits the way you like to bank, weighing factors that include:

• Promotional rates. Today’s high-yield accounts can earn 4% APY and higher. Yet some accounts advertise promotional or limited-time rates to entice you to sign up before adjusting to a lower rate based on market conditions.

• Low or no minimums. The best savings accounts require no minimum deposit or balance to earn interest, though you might be required to open with a minimum deposit or maintain a specific monthly balance to avoid monthly maintenance or service fees.

• Ease of accessing your money. Look for flexibility that includes ATMs and mobile apps that accept checks for deposit — or branch access, if you prefer in-person banking.

• FDIC or NCUA protections. Savings accounts are federally insured for up to $250,000 per account, per person — which means your money is safe up to the limit.

Dig deeper: Can you lose money in a high-yield account? It’s unlikely, but here’s what to watch out for

Other deposit accounts to save and grow your money

A savings account can offer flexible access to your money, but it isn’t the only safe place to store your savings and earn interest on your balance. Look to these alternatives that offer steady returns at APYs that can outpace traditional accounts.

• Certificate of deposit. A CD guarantees a high fixed rate of return on a principal deposit at the end of an agreed-on term. CDs differ from savings accounts in that you risk a withdrawal penalty if you need to access your money before the CD matures — though a short-term CD ladder can help you leverage today’s strongest rates with flexible, rolling returns into next year or longer.

• Money market account. Also called a money market savings account, the rate on an MMA can beat those of traditional savings accounts, with the same access to your money.

• High-yield checking account. A high-yield checking account is like a money market account in that it combines high APYs with checking benefits, but with unlimited debit and check-writing privileges you won’t find with an HYSA or MMA.

Dig deeper: HYSA vs. money market account: Which high-APY account is best for your nest egg?

Savings rates and high-interest accounts in the news

Savings rates strongly correlate with the target interest rate set by the Federal Reserve, the country’s central bank. This Fed rate is the benchmark that affects interest rates set for deposit accounts, loans, mortgages, credit cards and other financial products. As the Fed rate rises, so do APYs on savings accounts, CDs and money market accounts — with today’s rates on the best high-yield savings accounts topping 4% APY.

After increasing the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic, the Federal Reserve announced a highly anticipated half-point cut to its federal funds target interest rate after its September 2024 policy meeting.

September 18, 2024: Fed lowers benchmark rate for first time since March 2020

At the conclusion of its sixth rate-setting policy meeting of 2024 on September 18, 2024, the Federal Reserve announced it was lowering the federal funds target interest rate by 50 basis points to a range of 4.75% to 5.00% — the first cut since the Fed began raising rates in March 2022 — from a 23-year high of 5.25% to 5.50%.

A half-point cut isn’t typical of the Fed’s decisions, which historically call for measured quarter-point reductions, but points to an urgency in keeping the economy healthy, easing a slowdown in the labor market and averting a recession.

In its post-meeting statement, the Federal Reserve said it was lowering the target range “in light of the progress on inflation and the balance of risks,” acknowledging it’s “gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”

Economists estimate at least two additional rate cuts this year with an additional four cuts anticipated in 2025.

What to expect at the Fed’s November policy meeting

It’s widely expected the Federal Reserve will announce an additional cut to the federal funds rate at its next policy meeting on November 6 and November 7, 2024. The CME FedWatch Tool, which measures market expectations for Fed fund rate changes, projects a 96% chance the Fed will cut rates by a quarter percentage point to a range of 4.50% to 4.75% at its November meeting.

Economists are keeping a close eye on inflation and labor reports amid speculation as to timing of future cuts to the Fed rate. Signs of cooling inflation paved the way for September’s first rate cut in four years, with economic data indicating a continued decline from a peak of 9.1% in June 2022 to rates that have ranged from 2.5% and 4% since May 2023.

An eagerly awaited jobs report released November 1 showed hiring slowing substantially, with employers adding only 12,000 jobs to payrolls in October — a far lower total than the 105,000 anticipated after accounting for Hurricanes Helene and Milton and the ongoing Boeing strike. Employment figures were revised for the previous two months by 112,000, raising concerns about a cooling job market. The unemployment rate held at 4.1%.

The consumer price index released on October 10 showed inflation cooling to its lowest level since February 2021, with a 2.4% year-over-year increase in consumer prices in September, down from 2.5% year over year in August and closer to the Fed’s 2% target.

The producer price index released on October 11 reported no change in wholesale prices — or the prices manufacturers pay to producers of goods and services — in September from August, together with consumer pricing data, pointing to easing inflation that peaked two years ago and paving the way for the Fed to make another quarter-point cut in November.

At a conference in Nashville on September 30, Federal Reserve Chair Jerome Powell said “the economy is in solid shape,” and that the Federal Reserve “intend(s) to use our tools to keep it there,” making its decisions “meeting by meeting.” He added, “This is not a committee that feels like it’s in a hurry to cut rates quickly.“

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on Thursday, November 7, 2024, at 2 p.m. ET.

Dig deeper: When’s the next Federal Reserve meeting? What to expect — and how it affects your finances

Key terms to know

• Annual percentage yield. Called the APY, this is the total amount of interest you’ll earn on your deposit over one year, including compound interest, expressed as a percentage.

• Member FDIC. When a bank or financial institution is advertised as a member of the FDIC, it means that your money is protected by the Federal Deposit Insurance Corporation. Funds held by member FDIC institutions are insured and federally protected for up to $250,000 per depositor, offering a layer of protection if the bank were to go out of business.

• Maintenance or service fee. Some banks charge fees each month for simply holding your money, but many of the best high-yield savings accounts charge no monthly maintenance fees if you can meet account requirements.

• Minimum deposit. As with monthly fees, some banks require you to deposit a minimum amount of money when opening your account as a way for them to profit from fees if required balances aren’t met. The best high-yield savings accounts require no minimum balances to earn high rates of interest.

• Variable APY. APYs can be fixed or variable, depending on the type of deposit account. Fixed rates don’t fluctuate when, say, the Fed rate changes, while variable APYs do. Confirm the type of rate for the account you’re interested in to understand whether the rate is fixed or variable.

• Federal Reserve. The Federal Reserve — or Fed — is the central bank of the United States and the anchor of the financial system. Its Board of Governors is appointed by the president and confirmed by the Senate with the goals of maximizing employment, stabilizing prices and moderating long-term interest rates.

Dig deeper: Fixed vs. variable interest rates — how they work for borrowing and saving

Frequently asked questions about savings accounts

Learn more about how savings accounts work when narrowing down the best for your budget, lifestyle and financial goals.

What is compound interest?

Compound interest is often described as earning interest on your interest. It’s a powerful way to boost your savings over time by earning interest on both your initial deposit and any interest you earn along the way. An account’s APY is the total amount of interest you’ll earn on your deposit over one year, including compound interest, expressed as a percentage, with many HYSAs compounding daily or monthly.

Do I need to pay taxes on a savings account?

Yes. Interest you earn on your savings account is considered taxable income by the IRS. If you earn more than $10 in interest in a calendar year, your bank or financial institution will send you a Form 1099 to file with your annual tax return.

Which is best: fixed rates or variable rates?

There’s no best type of interest rate — rather, the difference is that fixed rates stay the same over time while variable rates can change based on market conditions. In many cases, the choice between fixed and variable rates will be a choice between products. Learn more about the difference between fixed and variable rates, and the ways they affect how you borrow and save money.

How do banks make money on savings accounts?

Banks charge higher interest rates on money they lend out to borrowers than the interest they pay on customer deposit accounts. The difference is called a spread, and it’s what banks rely on to make money.

Online banks and digital accounts don’t require the overhead of brick-and-mortar branches, allowing them to pass along savings to you in the form of even higher APYs than you might find in your neighborhood.

Is my money safe with an online-only neobank or digital account?

Yes. Neobanks are fintech — or financial technology — companies that partner with more recognizable FDIC-insured banks to offer deposit accounts protected by the government for up to $250,000. The FDIC insures the safety of your money, even if the neobank or fintech were to fail or go out of business. Look for terms like “member FDIC,” “FDIC insured” or “NCUA insured” when comparing your options. Learn more about how to confirm your bank is FDIC-insured.

Editor’s note: Annual percentage yields shown are as of Tuesday, November 5, 2024, at 8:10 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

Sources

• Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed October 11, 2024.

• Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed October 14, 2024.

• Employment Situation Summary, U.S. Bureau of Labor Statistics. Accessed October 7, 2024.

• 2024 Preliminary Benchmark Revision, U.S. Bureau of Labor and Statistics. Accessed August 5, 2024.

• National Rates and Rate Caps, FDIC. Accessed October 22, 2024.

• CME FedWatch Tool, CME Group. Accessed November 5, 2024.