‘They kept climbing.’ You can now earn up to 4% on a savings account. This is where.
According to a Capital One survey conducted in August 2022, nearly half of Americans don’t know what their current savings account interest rate is. And that could mean you’re losing a fortune. Indeed, while the average savings account still pays low interest rates, some high-interest savings accounts are paying more than they’ve had in a decade (think 3%-4% or more) . (You can see the highest savings account interest rate you can get right now here.)
“With interest rates rising, the most competitive savings accounts offering yields were last seen in 2009, and they continue to rise,” said Greg McBride, director of financial analysis at Bankrate. This is a list Savings accounts pay up to 4% this month. That said, average rates are still low, which we dive into below, as well as the pros and cons of MMAs, savings accounts, and CDs.
Savings rate today
Here are the latest averages on savings accounts and CDs, according to data from Bankrate released on January 17, then we chatted with experts about how much you should save (yes) , even in this high inflation environment), where to put money, and more.
Account | Average payout rate |
1 year CD |
2.35% |
CD 2 years |
2.45% |
CD 3 years |
2.63% |
CD 4 years |
2.55% |
CD 5 years |
2.74% |
CD 6 months |
1.83% |
CD 9 months |
2.46% |
Money to go to the market |
0.35% |
Save $10K CZK |
0.22% |
Save $25K CZK |
0.47% |
Save $50K CZK |
0.47% |
Higher yield savings accounts |
0.83% |
How much do you need in savings?
There are no exact numbers, but experts recommend keeping essential income between 3-12 months in an emergency fund, and factors like age, marital status and occupation all play a role. Determine exactly how much you need to save urgently. 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”. While some may consider it excessive, some experts recommend 12 months of emergency savings. That might only be relevant if you’re looking to switch careers and you’ll be out of work for a few months, says Alvin Carlos, certified financial planner at District Capital Management.
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.
Where to put your money: Savings accounts, MMA vs CD
Experts unanimously agree that you should keep your emergency fund money in a safe place, such as a high-yield savings account, money market account, or CD.
There are many benefits of a savings account, but the biggest benefits include the flexibility, ease of saving, earning 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.
Risk-averse investors or anyone who just wants to invest money for a short period of time should consider CDs as they can be helpful in protecting principal, while still allowing a small amount of money to be earned. interest. Indeed, CDs often have better interest rates than savings accounts, but it’s important to note that putting money on CDs really only makes sense if you can keep it there until maturity. term, usually for several months. and five years – otherwise, you will be subject to a heavy penalty. CDs are often one of the best savings tactics if you’re saving with a specific goal in mind, as you’re guaranteed to earn interest.
A money market account (MMA) is a savings account with debit and check capabilities and a higher interest rate than a traditional savings account. 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 you, MMA will offer a reasonable interest rate with the flexibility of checking text or using the debit card attached to the account.
Things to know before opening an MMA or savings account or buying a CD
Before opening a savings account, make sure that you are protected by federal deposit insurance, that you can meet any balance requirements to avoid any monthly fees, and that you can easily withdraw your funds. Enter and withdraw as 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. (See the highest savings account rate you can get right now here.)
Before receiving the CD, make sure you understand the terms of the deposit and that you agree to not be able to touch your money for any fixed amount of time you have agreed to. You should also familiarize yourself with the early withdrawal penalty fee in case you find yourself needing to withdraw before the CD matures.
Before opening an MMA, make sure you can meet the minimum balance requirement and compare the interest rates with those of traditional savings and high-yield savings accounts to make sure you is earning the most for his money.
The future of savings interest
Without a crystal ball, it’s impossible to say where rates will go, but with more rate hikes likely, savers can expect an improvement in yields on savings accounts and CDs, especially at online banks, smaller community banks, and credit unions. “The prospect of additional rate hikes is a promising one for savers, especially at a time when we are starting to see inflation fall,” McBride said.
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