Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Interest rates have skyrocketed since the Federal Reserve began aggressively raising rates in 2022 to slow inflation. While that’s bad news for homebuyers, it’s been a welcome change for savers who were earning just 0.14% a year ago for 12-month CDs — about $0.12 a month on a $1,000 balance. And yet Americans missed out on $42 billion that they could have earned in interest payments during the third quarter of 2022, according to a recent analysis in the Wall Street Journal. That’s because they’re keeping their money in traditional savings accounts instead of high-yield savings accounts, which might offer interest rates up to 4%.Of course, the question on many savers’ minds is: Will savings interest rates and CD rates continue to go up in 2023? The Fed is expected to hike interest rates at least a couple of more times this year, which will continue nudging interest rates on savings accounts higher, too. That’s why it’s more important than ever to make sure your savings is in the best possible place — and it’s easier to move money into a new account than you might think. Here’s a look at the best rates today, the different places to stash your cash, and tips on making the switch.PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSJjYjdiMTc1Yy03YjU2LTRmY2QtODVjZS1kYjcxNjJmZDhmM2UiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LXNhdmluZ3MtbXVsdGkiIGRhdGEtc3ViLWlkPSJodHRwOi8vd3d3LmtjcmEuY29tL2FydGljbGUvZmVkLXJhdGUtaGlrZS1vbmxpbmUtYmFuay1pbnRlcmVzdC1yYXRlcy80MjkzOTIwNyI+PC9kaXY+Types of savings accountsA checking account might be the first stop for your paycheck — it’s a handy place to keep the money you need for monthly bills and daily purchases. However, stashing too much money there isn’t a good idea, for two reasons:The money is easy to access, so you might be tempted to spend it (and blow your budget).Checking accounts don’t pay much (if any) interest, so they won’t help you build wealth.That’s why you need to park money you won’t spend right away — like an emergency fund or down payment — in a savings account (Although, most savings accounts will let you make up to six withdrawals a month with no penalty, so you’re not totally locking away your money.) Banks and other financial institutions offer several types of savings accounts. Your best option depends on when and how you want to access your money, and the return you’re after. Here are the pros and cons of four popular options.Traditional savings accountsThese accounts are available at regular banks and credit unions and are good for people who prefer in-person banking.Pros:It’s easy to open an account at your local bank or credit union (and possibly online).You can earn a small amount of interest.You can get in-person help or deposit cash at your local branch.Cons:The interest rates are low compared to other savings options.Monthly maintenance fees may apply, which can negate your interest earnings.Extra withdrawals may incur a fee.High-yield savings accountsHigh-yield savings accounts are available at online banks and credit unions and are a good option if you want to minimize fees while earning a more competitive rate.Pros:You can earn much higher interest rates than traditional savings accounts pay.The initial minimum deposit requirements are generally low.You’re less likely to owe monthly maintenance fees.Cons:There are few (if any) options for in-person banking.Transfers between accounts can take several days.You might not have account access via an ATM card.Money market accountsThese accounts combine the best features of savings and checking accounts — you earn interest and access your cash using a debit card or check — so they’re a smart choice if you want more ways to access your money.Pros:The interest rates may be higher than in traditional savings accounts.You can tap funds using a debit card, ATM card, or check.You can open an account at a traditional or online bank.Cons:You might need a higher initial deposit to avoid monthly fees.The interest rates might be tiered, so you’d need a larger balance to get the best rates.You might have limited check-writing capabilities.Certificates of deposit (CDs)CDs are available at traditional and online banks and are ideal for people who want competitive rates and are OK with stashing their cash for a while.Pros:You can earn above-average interest rates to grow your money.Online banks may offer lower initial deposit requirements.There aren’t usually any account maintenance fees.Cons:Early withdrawals typically trigger a penalty.Traditional banks offer lower rates than online options.You could miss out on future interest rate hikes.The best savings account interest rates todayThe national average rate on savings accounts and CDs continues to rise — and you can find above-average rates if you shop around. That’s especially true if you’re willing to shop at online banks, which generally offer better rates than their brick-and-mortar counterparts.According to Bankrate, the best savings account interest rates as of Feb. 16 are as high as 4%, with no minimum balance required. Meanwhile, you could earn up to 4.60% (with no minimum balance) with the best CD rates.PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSIwN2ZiOTg4My0yNzgwLTQ3MjItYmIzZi1mMjBhZWEwYWM1ZWEiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LWNkLW11bHRpIiBkYXRhLXN1Yi1pZD0iaHR0cDovL3d3dy5rY3JhLmNvbS9hcnRpY2xlL2ZlZC1yYXRlLWhpa2Utb25saW5lLWJhbmstaW50ZXJlc3QtcmF0ZXMvNDI5MzkyMDciPjwvZGl2Pg==Signs it might be time to switch banksIt’s hard to find a perfect bank that offers all the features you want. Still, it may be time to move on if your bank is letting you down. Here are five signs it might be time to find a new bank.You want higher interest rates. The interest rates banks pay vary widely — by bank, account type, and balance. If your cash could work harder for you somewhere else, it might be time to switch banks. Keep in mind that interest rates are expected to drop later this year, so now may be an especially good time to lock in a higher rate.Your bank charges too many fees. Some banks charge a long list of fees for ATM withdrawals, monthly maintenance, overdrafts, insufficient funds, excess transactions, and even paper statements. If your bank charges excessive fees, you can do better elsewhere.You want modern technology. Smaller banks and credit unions aren’t known for their digital capabilities. It might be time for a change if you prefer the convenience of online banking and a modern, user-friendly interface.You want better options. Most banks offer the usual suspects: checking and savings accounts, CDs, money markets, car loans, and mortgages. But if your credit could be better, you might have difficulty qualifying for your bank’s best loan rates and terms. Finding a bank that’s more willing to work with your financial situation might be worth the effort. You want different customer service. Poor customer service is frustrating, whether it’s due to staffing issues or something else. Likewise, it can be challenging if your bank’s customer service isn’t available when you are. If your bank is lacking in the customer service department, it might be a good time to switch.How to open a savings accountA savings account should be a safe place to park and grow your money. The best savings account for you will align with your savings timeline, how you want to access your funds, and how you want to do business (in person or online). Once you establish your goals and preferences, decide which account type will work best. Then, shop around and compare banks, paying attention to the following:How you access the account (brick-and-mortar, online, mobile app)Initial and ongoing account minimumsWithdrawal limitsAccount fees, charges, and penaltiesCustomer service (when and how it’s available)Interest ratesUltimately, the goal is to find a bank that offers the best combination of the features you want with an interest rate you can be happy about. With online banks offering the highest interest rates seen in years, there’s a good chance that a little bit of shopping around could help your money work a lot harder for you. PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSJjYjdiMTc1Yy03YjU2LTRmY2QtODVjZS1kYjcxNjJmZDhmM2UiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LXNhdmluZ3MtbXVsdGkiIGRhdGEtc3ViLWlkPSJodHRwOi8vd3d3LmtjcmEuY29tL2FydGljbGUvZmVkLXJhdGUtaGlrZS1vbmxpbmUtYmFuay1pbnRlcmVzdC1yYXRlcy80MjkzOTIwNyI+PC9kaXY+Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.
Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.
Mobile app users, click here for the best viewing experience.
Interest rates have skyrocketed since the Federal Reserve began aggressively raising rates in 2022 to slow inflation. While that’s bad news for homebuyers, it’s been a welcome change for savers who were earning just 0.14% a year ago for 12-month CDs — about $0.12 a month on a $1,000 balance.
And yet Americans missed out on $42 billion that they could have earned in interest payments during the third quarter of 2022, according to a recent analysis in the Wall Street Journal. That’s because they’re keeping their money in traditional savings accounts instead of high-yield savings accounts, which might offer interest rates up to 4%.
Of course, the question on many savers’ minds is: Will savings interest rates and CD rates continue to go up in 2023? The Fed is expected to hike interest rates at least a couple of more times this year, which will continue nudging interest rates on savings accounts higher, too. That’s why it’s more important than ever to make sure your savings is in the best possible place — and it’s easier to move money into a new account than you might think. Here’s a look at the best rates today, the different places to stash your cash, and tips on making the switch.
A checking account might be the first stop for your paycheck — it’s a handy place to keep the money you need for monthly bills and daily purchases. However, stashing too much money there isn’t a good idea, for two reasons:
- The money is easy to access, so you might be tempted to spend it (and blow your budget).
- Checking accounts don’t pay much (if any) interest, so they won’t help you build wealth.
That’s why you need to park money you won’t spend right away — like an emergency fund or down payment — in a savings account (Although, most savings accounts will let you make up to six withdrawals a month with no penalty, so you’re not totally locking away your money.) Banks and other financial institutions offer several types of savings accounts. Your best option depends on when and how you want to access your money, and the return you’re after. Here are the pros and cons of four popular options.
Traditional savings accounts
These accounts are available at regular banks and credit unions and are good for people who prefer in-person banking.
Pros:
- It’s easy to open an account at your local bank or credit union (and possibly online).
- You can earn a small amount of interest.
- You can get in-person help or deposit cash at your local branch.
Cons:
- The interest rates are low compared to other savings options.
- Monthly maintenance fees may apply, which can negate your interest earnings.
- Extra withdrawals may incur a fee.
High-yield savings accounts
High-yield savings accounts are available at online banks and credit unions and are a good option if you want to minimize fees while earning a more competitive rate.
Pros:
- You can earn much higher interest rates than traditional savings accounts pay.
- The initial minimum deposit requirements are generally low.
- You’re less likely to owe monthly maintenance fees.
Cons:
- There are few (if any) options for in-person banking.
- Transfers between accounts can take several days.
- You might not have account access via an ATM card.
Money market accounts
These accounts combine the best features of savings and checking accounts — you earn interest and access your cash using a debit card or check — so they’re a smart choice if you want more ways to access your money.
Pros:
- The interest rates may be higher than in traditional savings accounts.
- You can tap funds using a debit card, ATM card, or check.
- You can open an account at a traditional or online bank.
Cons:
- You might need a higher initial deposit to avoid monthly fees.
- The interest rates might be tiered, so you’d need a larger balance to get the best rates.
- You might have limited check-writing capabilities.
Certificates of deposit (CDs)
CDs are available at traditional and online banks and are ideal for people who want competitive rates and are OK with stashing their cash for a while.
Pros:
- You can earn above-average interest rates to grow your money.
- Online banks may offer lower initial deposit requirements.
- There aren’t usually any account maintenance fees.
Cons:
- Early withdrawals typically trigger a penalty.
- Traditional banks offer lower rates than online options.
- You could miss out on future interest rate hikes.
The national average rate on savings accounts and CDs continues to rise — and you can find above-average rates if you shop around. That’s especially true if you’re willing to shop at online banks, which generally offer better rates than their brick-and-mortar counterparts.
According to Bankrate, the best savings account interest rates as of Feb. 16 are as high as 4%, with no minimum balance required. Meanwhile, you could earn up to 4.60% (with no minimum balance) with the best CD rates.
It’s hard to find a perfect bank that offers all the features you want. Still, it may be time to move on if your bank is letting you down. Here are five signs it might be time to find a new bank.
- You want higher interest rates. The interest rates banks pay vary widely — by bank, account type, and balance. If your cash could work harder for you somewhere else, it might be time to switch banks. Keep in mind that interest rates are expected to drop later this year, so now may be an especially good time to lock in a higher rate.
- Your bank charges too many fees. Some banks charge a long list of fees for ATM withdrawals, monthly maintenance, overdrafts, insufficient funds, excess transactions, and even paper statements. If your bank charges excessive fees, you can do better elsewhere.
- You want modern technology. Smaller banks and credit unions aren’t known for their digital capabilities. It might be time for a change if you prefer the convenience of online banking and a modern, user-friendly interface.
- You want better options. Most banks offer the usual suspects: checking and savings accounts, CDs, money markets, car loans, and mortgages. But if your credit could be better, you might have difficulty qualifying for your bank’s best loan rates and terms. Finding a bank that’s more willing to work with your financial situation might be worth the effort.
- You want different customer service. Poor customer service is frustrating, whether it’s due to staffing issues or something else. Likewise, it can be challenging if your bank’s customer service isn’t available when you are. If your bank is lacking in the customer service department, it might be a good time to switch.
A savings account should be a safe place to park and grow your money. The best savings account for you will align with your savings timeline, how you want to access your funds, and how you want to do business (in person or online). Once you establish your goals and preferences, decide which account type will work best. Then, shop around and compare banks, paying attention to the following:
- How you access the account (brick-and-mortar, online, mobile app)
- Initial and ongoing account minimums
- Withdrawal limits
- Account fees, charges, and penalties
- Customer service (when and how it’s available)
- Interest rates
Ultimately, the goal is to find a bank that offers the best combination of the features you want with an interest rate you can be happy about. With online banks offering the highest interest rates seen in years, there’s a good chance that a little bit of shopping around could help your money work a lot harder for you.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.
This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
