What Is the Average Interest Rate for Savings Accounts?

As of August 21, 2023, the national average interest rate on bank savings accounts was 0.43%.⁷ On that same day the average interest rate on a five-year CD was 1.41%⁸ – much higher. Because these rates are averages, you might not find a savings account or CD with exactly that rate. But it gives an idea of the sort of rates you can expect from brick-and-mortar banks.

If you’re going to tie your money up for a certain period of time, you’ll want to ensure that you’re getting the best interest rates possible.

Interest rates on bank savings accounts and CDs depend in part on the U.S. Federal Reserve’s interest rate decisions. When the federal funds rate – the key policy interest rate set by the Fed – rises, interest rates on bank savings accounts usually rise as well. Similarly, when the federal funds rate falls, so do the interest rates on bank savings accounts. Sometimes savings interest rates change in advance of Fed rate decisions, if the Fed is signaling they may move rates in a particular direction. If you want to anticipate the likely future direction of interest rate changes on your bank saving accounts, it’s worth keeping an eye on Fed announcements.

For example, in the early 1980s, the federal funds rate soared and interest rates soon followed, with the average rate on a five-year CD peaking at nearly 12% in 1984.^9,10 Since then, the Fed’s policy rate has gradually fallen, and so too have interest rates on savings. In the 1990s, average rates were around 4–5%, and after the early 2000s recession they fell to 1–2%. After the 2008 financial crisis, the Fed cut the federal funds rate to 0.25%, and average interest rates on bank savings fell to nearly zero.

As you can see, interest rates are always changing, which is why keeping up with the fluctuations can be a good way to ensure that you’re getting the best return possible on your savings.

If these low APYs don’t meet your needs, it might be worth considering a high-yield savings account. Many online banks also have savings accounts with significantly higher yields than those available at brick-and-mortar banks.

However, high-yield accounts aren’t immune to Fed interest rate changes. In August 2020, interest rates on online savings accounts were typically around 1% APY, but following the Fed’s announcement that its policy rate would remain at zero through 2023, online banks trimmed their interest rates. By January 2022, online banks were typically offering interest rates of around 0.5% APY on high yield savings accounts.

Just as with traditional bank savings accounts, it’s worth shopping around for high yield savings accounts that pay more than average. Evan a fluctuation that’s as little as 0.05% over the typical APY can make a difference to your earned interest over time, depending on the size of your savings.