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What is the Average Interest Rate on a Savings Account

Matthew Levy Updated: June 26, 2023 • 4 min read

The average savings interest rate in the US is close to zero. However, some banks are offering 20 times the national average. Here’s the whole picture.

A common question people ask their financial advisors is, "how much interest does a savings account earn?" As of June 2022, the average savings account interest rate in the US is 0.07%, according to Bankrate's weekly survey of financial service providers. With inflation at 8.6%, you need to do much better to build long-term wealth and create an emergency fund. We explore the different types of savings account interest, their interest rates, and the risks associated with each type of account. Read this before you shop around for the best savings account.


Average Interest Rates for Interest Checking, Savings, and Money Market

If you park your funds in a regular savings account, you may lose your purchasing power due to inflation. Even a 1% extra APY can substantially impact your savings in a few years. You can earn interest on three types of bank accounts; interest checking, savings accounts, and money market accounts.

Interest Checking- You can open an interest checking account for daily transactions and earn monthly interest on the closing balance. Most checking accounts don't require a minimum balance but pay lower interest than savings or money market accounts.

Savings Accounts- You may open a savings account for everyday transactions or build a short-term emergency fund. You can get a higher interest rate than a checking account but lower than money market accounts.

Money Market Accounts- With a money market account, you can earn a high APY on your savings. However, money market accounts require a minimum balance or deposit amount that is higher than that of savings accounts.

Current Interest Rate on Savings Accounts

Account Type  Average Interest Rate 2022
Interest Checking 0.03% APY
Savings Accounts 0.07% APY
Money Market Accounts 0.08% APY

Current Interest Rate on Savings Accounts

Here's an overview of major banks' average savings account interest rates in 2022.

Bank Minimum Opening Balance Savings account APY
Capital One $0 0.90%
Bank of America $100 0.01%
Wells Fargo $25 0.01%
US Bank $25 0.01%
TD Bank $0 0.02%
First Foundation Bank $1000 1.67%
Discover Bank $0 0.90%
LendingClub $100 0.65%
Marcus by Goldman Sachs $0 0.50%
Brio Direct $25 1.15%
UFB Direct $0 1.51%
Bask Bank $1 1.50%
Bread Savings $100 1.15%
Ally Bank $0 0.90%
Ivy Bank $2500 1.5%
iGObanking $0 1.30%
TAB Bank $1 1.26%
CIBC USA $1000 1.27%
My Banking Direct $1 1.25%
Citizens Access $5000 1.25%
Rising Bank $1000 1.20%
Fitness Bank $100 1.25%

APY: Definition, Formula & Example

APY, or annualized percentage yield, is the annual return on an investment compounded over a certain period. It is different from APR, which only accounts for simple interest. Since bank deposits are usually compounded daily on the closing balance, APY is used to calculate the deposit interest rate.

The formula for APY is:

  • APY= (1 + r/n )n – 1

APY formula

Where,  r = rate of interest & n = compounding period/year

For example, if a bank offers an interest rate of 1.05%, compounded monthly, then the APY boils down to

  • APY = (1 + 1.05/12)12 – 1 = 1.0551%

If the same interest rate of 1.05% is compounded weekly, the APY will become

  • APY = (1 + 1.05/52)52 – 1 = 1.0052%

You may notice that APY depends on two variables; the rate and compounding timeframe. The APY increases when banks increase the base interest rate or the compounding timeframe.

Pros & Cons of Using savings accounts

Pros of Using savings accounts

  • High Liquidity: You can withdraw your funds anytime from a savings account.
  • Earn Interest: You can earn interest on your savings.
  • Cash Facility: You can deposit cash into your savings account at any bank branch. You can also withdraw money through a bank teller or an ATM. However, Fed's Regulation D caps the maximum number of "convenient" transactions to six times a month, beyond which you may need to pay extra.
  • FDIC insured- The funds in your savings account are secured up to $250,000 per depositor, bank, and account type.

Cons of Using savings accounts

  • Fees: Banks and credit unions may charge account maintenance fees, debit card charges, check charges, etc. on savings accounts.
  • Low Interest: Savings accounts usually pay lower interest than CDs, mutual funds, and bonds.
  • Fluctuating Interest Rate: Unlike CD or bonds, the interest rate on savings accounts can change drastically depending on market conditions.
  • Minimum Balance Requirement: Some banks require you to maintain a minimum balance on your savings account.
  • No ATM/Check Facility: Some banks do not allow ATM or check facility with a savings account. You may need to open a checking account for convenient withdrawals.


There are more than 4500 banks and credit unions in the USA, with some offering almost 20 times the average interest rate on savings account. You can diversify your savings and park your funds in some of these high-yield savings schemes. Bank rates also change quickly, so ensure that your bank consistently provides higher than average interest rates on savings accounts. Due to lower overhead costs, online banks can offer higher interest rates and lower fees than brick-and-mortar counterparts. You can choose any FDIC-insured online bank to grow your savings.

If you are earning less than 1% APY as of 2022, you can open a savings account in an online bank or park funds in a money-market account to get a higher return on your deposits. While browsing for savings account interest rates, make sure to read the fine print and check the three minimums; minimum account opening balance, minimum balance to earn APY, and minimum balance to avoid excess fees.



Is it better to have a savings account or invest?

It depends on your risk appetite and financial goals. If you are young and have a constant source of income, you can invest a major portion of your salary in bonds, stocks, gold, or crypto assets. However, your investments may experience high volatility, so make sure you have enough savings to run daily expenses. On the other hand, if you want to retire peacefully, you may park your funds in low-risk assets like CDs, individual retirement accounts (IRA), pension funds, health savings accounts (HSA), etc. and keep some liquid cash for emergencies in a savings account. 

How do I get a high-interest rate on my savings account?

You can get a high-interest rate on your savings account by choosing an online bank or opening a money-market account. Online banks provide higher interest on deposit accounts than traditional banks. You can also indirectly invest in government bonds, commercial papers (CPs), and certificates of deposits (CDs) through Money Market Deposit Accounts (MMDA). When bond prices (underlying assets) increase, you can earn more interest on a money market account. You may also get an additional dividend on your funds. You can withdraw your money from an MMDA through an ATM or check. 

Are savings accounts worth it?

The biggest advantage of your savings accounts is access to funds. You can easily withdraw cash or pay your online bills with a savings account. You can also use your savings account to create a short-term emergency fund from your surplus income. Depending on your financial goals, risk appetite, transaction frequency, rate of inflation, and cash demand, parking some free cash in a savings account is worth it. 

What is a good interest rate on a savings account?

Financial advisors consider any rare above 1% APY (10 times the average savings account interest) a good interest. Make sure to check the account maintenance fees, debit card charges, and transaction limits while comparing interest rates.  

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Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.