If you haven’t transferred your savings account recently, now might be the time

On Wednesday, the Federal Reserve raised interest rates again – which is good news for savers. Furthermore, savers have seen yields on savings accounts increase for months now. “The highest interest savings accounts available nationally are paying over 4% and banks are still in the process of increasing their payments. Not only are these accounts available nationally, but many of the accounts with returns above 4% don’t require a minimum deposit, so they really have a lot of money, said Greg McBride, director of financial analysis at Bankrate. available to everyone. (You can see the highest savings account rate you can get right now here.)

In fact, Americans haven’t seen returns like this on some high-yield savings accounts in nearly 15 years. “With interest rates rising, the most competitive savings accounts offering yields were last seen in 2009, and they continue to rise,” McBride said.

That said, the average savings account is still paying low interest rates (see below), so getting these higher rates may require consumers to switch banks. “We haven’t seen a peak in savings account yields yet. McBride said there will be continued upward momentum with Fed rate hikes.

Savings rate today

Here are the latest averages for savings accounts, according to data from Bankrate released on Feb. 1, then we chat with experts about how much you should save (yes, now) even in today’s high inflation environment), where to send money, and more.

How much money should you save?

There’s no magic number, but experts generally recommend 3-12 months Necessary income in the emergency fund. Factors such as age, marital status, and occupation all play a role in determining exactly how much emergency savings you need. “A high-yield savings account is the perfect place for your emergency fund – accessible but just out of reach so you’re less tempted to take it for discretionary spending,” says McBride. (You can see the highest savings account rate you can get right now here.)

Indeed, couples with two earners may need less than a single person, for example. Curtis Crossland, certified financial planner with Suttle Crossland Wealth Advisors, says: “Couples who are still in their careers want 3 to 6 months of savings, but it could be closer to 6 months if differential income”.

Meanwhile, those in a job that is prone to layoffs, or someone looking to switch careers soon, can take up to 12 months. Furthermore, in addition to an emergency fund, you may also want to have additional accounts to save for short-term goals, such as buying a home in the next 6 months or taking a vacation in the near future.

Savings account vs money market account

Experts agree that you should deposit your emergency fund in a safe place, such as a high-interest savings account or money market account. (You can see the highest savings account rate you can get right now here.)

The benefits of a savings account are plentiful, but the biggest benefits include the flexibility, ease of saving, receiving interest, and knowing that your money is protected. However, there may be limitations when you deposit money into high-interest savings accounts, such as withdrawal limits that incur fees when you exceed the number of withdrawals in a month. In the long run, these accounts aren’t ideal because they don’t pay as much interest as other savings vehicles.

Another type of account to consider is the money market account (MMA); they are debit and checkable savings accounts with higher interest rates than traditional savings accounts. MMAs typically have higher minimum balance requirements and often lower interest rates than high-interest savings accounts, but having the option to spend directly from a savings account is important for MMA will offer a reasonable interest rate with the flexibility of a check text or use the debit card attached to the account.

Things to know before opening a savings account or MMA

First, you’ll want to find an account that is protected by federal deposit insurance. “Make sure you are dealing directly with a federally insured and regulated financial institution and not a third-party solution,” says McBride.

Review the account’s interest rate, as well as the rules that come with the account, such as any balance requirements that you must meet to avoid fees. Also consider how easy it is to get in and out when needed. “Typically, linking an account to your existing bank or credit union checking account is an easy way to move money back and forth,” says McBride. (You can see the highest savings account rate you can get right now here.)

McBride also recommends that you read the fine print and note any balance restrictions on earning higher yields, any direct deposit or monthly trading requirements to earn that return, and any geo-restrictions or membership requirements.