You can find savings accounts and CDs paying way above the national average — if you know where to look.
Even though the Federal Reserve is slowing its pace of interest rate hikes, some banks are still raising their rates on savings accounts. That gives you even more opportunities to beat inflation with your savings.
People have all kinds of excuses for keeping their low-annual percentage yield (APY) savings accounts. But keeping your savings at the local bank, generally, just doesn’t make sense because their APYs usually aren’t competitive with yields at many online banks.
“This is something that puts more money in your pocket as long as you’re willing to go outside the comfort zone of having all your money at the bank down the street,” says Greg McBride, CFA, chief financial analyst at Bankrate.
APYs are on the rise at these banks
Here’s a look at some of the banks that raised their APYs on savings products in the past week:
- BBVA Compass (money market account): From 2.35 percent APY to 2.40 percent APY.
- Sallie Mae (money market account): From 2.20 percent APY to 2.30 percent APY.
- TIAA Bank (2-year CD): From 2.83 percent APY to 2.85 percent APY.
Savers have plenty of options, with some banks featuring low minimal minimum balance requirements and APYs that haven’t been this high in years, thanks to four Federal Reserve rate hikes in 2018 and a competitive landscape for online banks.
Not all banks are aggressively raising yields
Bankrate’s national average for savings accounts is still at a very low 0.1 percent APY. The national average for one-year CDs isn’t much better at 0.88 percent APY. There are a number of savings accounts, money market accounts and CDs that offer yields well above those national averages. The national average yield on money market accounts remained at 0.21 percent annual percentage yield this week, according to Bankrate data.
Look for a bank that has a minimum balance requirement that fits your needs and a competitive APY. If you’re looking for CDs, focus more on short-term CDs to use as a holding pattern to see where APYs head in the future.
“Don’t lock in those multi-year CDs just yet,” McBride says. “As interest rates rise further, the longer maturities will offer yields that are more compelling for the period of time you’re committing your money. Right now, the additional yield you get in a four-year or five-year CD isn’t enough of a boost over a one-year CD to make you take the plunge into longer maturities. Later this year may present a better opportunity to do so.”