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What Is the Average Interest Rate on a Savings Account?

Average Savings Account Interest in 2022
Lauren Ward
Lauren WardUpdated December 10, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Thanks to actions by the Federal Reserve (a.k.a., the “Fed”) in 2022, rates are on the rise for savings accounts. While the current national average savings account rate is only 0.24%, high-yield savings accounts are offering many times that rate. And though a 2.5%, or even 3.5%, yield isn’t as much as you could potentially earn by taking on more risk with an investment portfolio, it can help your money grow while keeping it in a safe account until you need it — whether that’s in a couple of months or a couple of years.Read on to learn more about savings accounts, how interest rates work, and how to find the best place to stash your extra cash.

What Are Savings Accounts?

A savings account is an interest-bearing deposit account held at a traditional or online bank or a credit union. While these accounts generally do not provide big returns, they are safe spots to park money for your short-term needs, such as building an emergency fund or saving up for a car or upcoming vacation. Any money you deposit into a savings account is federally insured up to up to $250,000 per depositor, per account ownership type at each bank. (Credit unions offer insurance with the same terms.)Money kept in a savings account isn't quite as accessible as money kept in a checking account. Banks typically limit the number of certain transfers from a savings account — online, or by check or debit card, for example — to six a month. Exceeding the limit typically results in a fee (often $5 to $10). Taking money out in person at a bank or ATM doesn't count toward the six-per-month cap. While the government stopped enforcing transaction limits in 2020, many banks have continued to impose limitations.Recommended: Guide to Opening a Savings Account

How Savings Account Interest Works

The interest banks offer is often expressed as an annual percentage yield (APY), which tells you the amount of interest you earn in a year. The published APY on a savings account includes the effects of compounding. This means it includes the interest earned on your first deposit, as well as the interest earned on any interest added to the account during the year. Interest can be compounded daily, monthly, or quarterly; the more frequently interest is compounded (i.e., added to your balance), the faster your savings will grow. To compare interest rates of savings accounts apples to apples, you’ll want to compare APYs and not interest rates.Whatever APY a savings account is offering when you open your account, keep in mind that it can change at any time. Rates on savings accounts are variable and may rise and fall in relation to the federal funds rate. The Fed has recently made a series of increases in the federal funds rate.Recommended: What is the Prime Rate?

Pros and Cons of Using Savings Accounts

Savings accounts offer a lot of advantages, but they also have some limitations. Here’s a look at the pros and cons stack up.

Pros

  • Interest The money you keep in a savings account earns interest and compounds, meaning you earn interest on the interest that’s added to the account, helping your money grow over time.
  • Funds are accessible Unlike some other savings vehicles, it’s easy to access your money or transfer it to your checking account when you need it. There are no holding or waiting periods, and you don’t have to sell investments in order to get your money out.
  • Ideal for short-term goals Savings accounts can be a good way to save for things you want to pay for the next few months to a year, such as a vacation or wedding. If you were to put this money into a risky investment like stocks, there’s a chance you could lose money in the short-term. 
  • Safety The money you put in a savings account is typically insured by either the Federal Deposit Insurance Corp (FDIC) or the National Credit Union Administration (NCUA). This means you can’t lose your money (up to $250,000) should the bank or credit union fail. 

Cons

  • Low interest The average savings account interest rate isn’t very high. Though high-yield savings accounts pay considerably more, even these accounts typically don’t pay enough to meet longer-term savings goals, like retirement or a child’s college education
  • Bank fees Some banks charge monthly maintenance fees and/or other fees, which can eat away at your earnings.
  • Account minimums Some savings accounts require a minimum initial deposit to open the account, as well as ongoing minimum balance requirements to avoid fees or get the expected interest rate.
  • Withdrawal limits Savings accounts typically have restrictions on how often you can make withdrawals or transfers and charge fees if you exceed the max. 
Recommended: Checking vs Savings Account Differences

Average Interest Rates on Savings Accounts in the U.S. 

Here’s a look at how much interest you can earn, on average, in different types of bank accounts.

Interest on Saving Accounts 

According to the FDIC, the average savings account interest rate as of November 21, 2022, is 0.24%. However, you can often earn multiple times more than the average interest rate with a high-yield savings accountThese days, online high-yield accounts are offering anywhere from 2.35% APY to 3.83% APY. While these options typically don’t provide branch locations, it’s generally easy to arrange transfers to a checking account using your mobile device or computer, even if the accounts are at two different banks.

Interest on Checking Accounts

While checking accounts typically don't pay interest, you can find some that do. Called “interest checking” or “high-yield checking,” these accounts often have balance minimums and the rates are generally nominal. The national average for interest checking accounts is 0.04%, according to the FDIC’s latest numbers. 

Interest on Money Market Accounts

A money market account is a type of savings account that offers some of the features of a checking account, such as check-writing privileges and/or a debit card. These accounts typically come with minimum balance requirements, which may be $5,000 or more. Interest rates on money market accounts tend to be higher than regular savings accounts, but lower than high-yield savings accounts. According to the FDIC, the average money market account rate is 0.29%. However, you can often earn significantly more with an online money market account.Recommended: What is a Business Money Market Account? 

Savings Account APYs by Bank

Here’s a look at savings account APYs by major U.S. banks. These six banks are the largest U.S. banks (based on asset size), according to the Federal Reserve. The APYs listed are for a basic savings account opened in November 2022.
BankAPY
Chase0.01%
Bank of America0.01%
Citibank0.05%
Wells Fargo0.15%
U.S. Bank0.01%
PNC Bank0.02%
While these rates are lower than the average savings account interest rate, you can often earn a higher APY at these banks by maintaining a certain minimum balance and/or linking your savings account with a checking account. Also keep in mind that rates offered by online banks can be 10 (or more) times the savings account rates offered by large national banks. This is due to the fact that online-only institutions generally have lower overhead than brick-and-mortar banks and will typically pass that savings along to their customers.

Finding the Right Savings Account for You

To find the best savings account for your needs and financial situation, here are some things to consider:
  • APY To compare rates offered by different banks, you’ll want to look at APYs (which include the effect of compounding interest) rather than interest rates.
  • Fees Some savings accounts come with fees that can eat away at any interest you earn. Some to watch for include: monthly maintenance fees, excess withdrawal fees, and inactivity fees.
  • Minimums In some cases, a savings account will require a minimum initial deposit and/or an ongoing balance requirement in order to get the expected rate or avoid a fee. You’ll want to be sure you can meet any balance requirements.

The Takeaway

As you look for the right place to park your extra cash, the average savings account interest rate can be a useful guide. However, you should be able to find a bank that’s offering an APY many times higher than the national average. In addition to comparing APYs, you’ll also want to look at minimum opening balances and any ongoing balance requirements to avoid monthly fees.If you’re not sure where to start your savings account search, Lantern by SoFi can help. With our online banking marketplace, it’s fast and easy to compare high-yield savings accounts based on APY, fees, and balance minimums. Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

How much will $10,000 earn in one year in a savings account in 2022?
Is 3.00% a good interest rate for a savings account?
Are there any banks that give 7.00% interest on a savings account?
Photo credit: iStock/CatLane
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About the Author

Lauren Ward

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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