Ring in the new year with APYs of up to 5.05% (that’s 10x the national average) — Dec. 31, 2024

As 2024 draws to a close, there’s no better time to confirm you’re earning the most competitive rates you can on your hard-earned money. At the top of your year-end financial checklist? Out with the old way of storing your money and in with a simple switch to a supercharged high-yield savings account.

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In just a few minutes before ringing in the new year, you could be earning up to 5.05% APY on your savings, offering a safe way to supercharge the interest you earn at up to 10 times faster than at your neighborhood bank. These high-powered accounts historically pay out more significant yields than your everyday savings, the best of them found at FDIC-insured digital and online-only banks that operate without the high overhead costs of a traditional bank — and without high fees or minimums that can hold back your earning potential. And they’re backed by powerful compounding and robust apps that build your balance faster by seamlessly connecting to your checking account for flexible access to your money, whenever you need it.

With the Fed expected to serve up additional rate cuts in the coming year, make smarter banking your top New Year’s resolution. Here’s where to find the year’s highest yields on a range of FDIC-insured accounts with easy signup. And here’s to a happy, healthy 2025!

💰 Today’s best CDs: Enter 2025 with guaranteed yields of up to 4.27% APY on terms of 12+ months

High-yield savings rates for December 31, 2024

Today’s highest savings rates are at FDIC-insured digital banks and online accounts paying out rates of up to 5.05% APY with no minimums at Patriot Bank, Western Alliance Bank and other trusted providers as of Tuesday, December 31, 2024.

These digital accounts and online-only banks may not sound as 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 November and December 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 short- and long-term CDs.

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.

Dig deeper: 13 common bank fees you shouldn’t be paying — and how to avoid them

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 4.00% 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.

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  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 cash?

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 on Sept. 18, followed by two additional quarter-point cuts after its November and December policy meetings.

December 18, 2024: Fed cuts rates by another quarter point — third straight cut since Sept.

At the conclusion of its eighth and final rate-setting policy meeting of the year on December 18, 2024, the Federal Reserve announced it was lowering the federal funds target interest rate by 25 basis points to a range of 4.25% to 4.50%. The Fed’s third consecutive cut this year comes after slashing the Fed rate by a jumbo half point in September and quarter point in November.

In its post-meeting statement, the Federal Reserve said it was lowering the target range, citing “labor market conditions have generally eased, and the unemployment rate has moved up but remains low” while acknowledging a “somewhat elevated” inflation rate. “In considering additional adjustments,” the Fed said it would “carefully assess incoming data, the evolving outlook, and the balance of risks.”

Policymakers estimate just two additional cuts in 2025, down from four cuts projected after Sept.’s meeting — though in addition to mixed economic signals that include stubborn inflation and strong job growth, the impacts of a Trump presidency leave the market uncertain as to how deep the cuts to expect.

What to expect at the Fed’s next policy meeting: January 28–29, 2025

It’s too early to predict what the Federal Reserve will decide at its next policy meeting on January 28 and January 29, 2025, though many experts expect the Fed will announce additional cuts to the federal funds rate in the new year.

Economists are keeping a close eye on inflation and labor reports amid speculation as to timing of future cuts to the Fed rate, with inflation 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 on December 6 showed hiring rebounding sharply, strengthening the case for a federal rate cut this month. Employers added 227,000 jobs to payrolls in November — significantly higher than economists’ expectations and a dramatic increase from October’s revised gain of 36,000 jobs. The jobs report also showed upward revisions for previous months, with September payrolls revised up by 32,000 to 255,000 and October revised up by 24,000. The unemployment rate edged up moderately to 4.2% from October’s 4.1%.

Fresh economic readings the following week, however, revealed persistent inflation, starting with the consumer price index released on December 11 — a widely used indicator of inflation — which showed the prices of consumer goods and services rising 2.7% year over year in November, up from 2.6% in October though largely in line with forecasts. Producer price index data released on December 12 reported wholesale prices — or the prices manufacturers pay to producers of goods and services — rising 3% year over year in November, up from 2.4% in October, largely driven by a surge in food costs.

At a press conference following December’s FOMC meeting, Federal Reserve Chair Jerome Powell said about future Fed rate changes, “We’re not on any preset course,” adding, “we’re going to be cautious about new cuts” in the new year.

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on Wednesday, January 29, 2025, 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. Its Federal Open Market Committee meets throughout the year, when it sets the federal funds target rate that influences deposit account 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.

Which is best for flexible savings: a no-penalty CD or a high-yield account?

Both are low-risk investments that offer a safe way to grow your money while earning interest without paying a fee for withdrawals. Yet which is better comes down to your deposit amount, need for access and savings goals. Learn how they differ — and what to consider — in our comparison guide to no-penalty CDs and savings accounts.

I’ve saved up $10,000. Where’s the best place to put it?

Saving up $10,000 is an impressive milestone that opens up several financial opportunities that can better position you for a more stable financial future. You can put it to work through passive income streams, contribute to growing a retirement fund or pay down high-interest debt. See our guide to the five smartest moves to make with your $10,000.

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. Learn more about how you can turn time into money in our guide to compounding.

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.

What’s the difference between saving and investing?

The core difference between saving and investing lies in the accessibility of your money and the risks you take with it. Saving means keeping your money in secure accounts with little to no risk of losing your principal. On the other hand, investing involves buying assets like stocks, bonds or mutual funds that can potentially earn higher returns. Learn more in our guide to saving and investing to find the best approach for your nest egg.

Editor’s note: Annual percentage yields shown are as of Tuesday, December 31, 2024, at 8:10 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

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