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Today's Best CDs: Outpace Inflation with Risk-Free Returns of Up to 5.25% APY

High-yield savings rates for November 18, 2024, are at FDIC-insured digital banks and online accounts paying out rates of up to 5.10% APY with no minimums. These digital accounts offer a safe and stable way to support your everyday banking and reach your short-term goals. Without the overhead of branches and staff, they can afford to pass along higher yields, more than 10 times the national average. And like traditional savings, these accounts are backed by FDIC insurance for up to $250,000.

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High-Yield Savings Rates for November 18, 2024

Today's highest savings rates are at FDIC-insured digital banks and online accounts. Patriot Bank, Poppy Bank, and other trusted providers are offering rates of up to 5.10% APY with no minimums. These digital accounts and online-only banks may not be as familiar as traditional banks, but they offer the same FDIC insurance protection. And while the Federal Reserve once limited transactions and withdrawals, that limitation is now suspended, giving you more flexibility with your money.

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Traditional Savings Account Rates

The Federal Deposit Insurance Corporation tracks monthly average interest rates on savings and other deposit accounts. Here's how FDIC national deposit rates on a $10,000 minimum deposit compare between September and October 2024. Pulling back on average rate updates shows minimal movement for traditional savings accounts, while there is more movement on 12-month CD terms. The FDIC is an independent government agency that maintains stability in the financial system and provides insurance on consumer deposit accounts.

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What is a Savings Account?

A savings account is a type of deposit account designed for storing money you don't plan to use for regular expenses. These accounts don't typically offer check-writing privileges or debit cards, but you can find limited checking with a high-yield money market account. Saving accounts earn you interest on your balance, anywhere from 1% APY with a traditional account to 4% APY and higher with high-yield accounts, helping your savings grow faster.

Simple Interest vs. Compound Interest

Simple interest refers to the interest earned on the principal balance only. For example, if you invest $10,000 in an account that pays 3% simple interest, after three years, you'll earn $900 in interest. But with compound interest, you earn interest on both the principal and the accumulated interest. Let's say you invest $10,000 in an account that pays 3% compounded annually. After the first year, you'll have $10,300. In the second year, you'll earn $309 in interest, and by the third year, you'll have $10,927.27. The more frequent the compounding, the more you can earn. Read your account's disclosure statements to understand how often your interest is compounded and credited.

High-Yield Savings Accounts vs. Traditional Savings Accounts: What's the Difference?

There is no official definition for these accounts, but they both earn you incremental interest on your balance. The main difference is your earning potential. A high-yield savings account can earn you significantly more interest than a traditional savings account, with digital banks and online accounts offering the strongest rates. The best digital banks and online accounts come with no fees and no minimum deposits, making it easier to maintain your account over the long term.

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How to Compare the Best Savings Accounts

Digital banking offers more competitive rates and fewer fees than traditional banks. Robust apps make it easy to manage your money and keep an eye on your balance. When comparing savings accounts, look for factors such as promotional rates, low or no minimums, ease of accessing your money, and FDIC or NCUA protections. Promotional rates can be enticing, but remember that rates can fluctuate. Look for an account that fits your banking style and meets your needs.

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Other Deposit Accounts to Save and Grow Your Money

A savings account is not the only safe place to store your savings. Consider alternatives such as certificates of deposit (CDs), money market accounts, and high-yield checking accounts. A CD guarantees a high fixed rate of return on a principal deposit, but you risk a withdrawal penalty if you need to access your money before the CD matures. A money market account offers competitive rates with easy access to your money. A high-yield checking account combines high APYs with checking benefits and unlimited debit and check-writing privileges.

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Savings Rates and High-Interest Accounts in the News

Savings rates are closely tied to the Federal Reserve's target interest rate. As the Fed rate rises, so do APYs on savings accounts. After increasing the target interest rate 11 times, the Federal Reserve announced rate cuts in September and November. November's rate cut was the second since March 2020. Economists expect more rate cuts in the future, but the impact of a Trump presidency is uncertain. Keep an eye on inflation and labor reports to understand what to expect at the Fed's next policy meeting.

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Key Terms to Know

Annual percentage yield (APY) is the total amount of interest you'll earn on your deposit over one year, including compound interest. Member FDIC means your money is protected by the Federal Deposit Insurance Corporation. Maintenance or service fees can be charged by some banks, but many high-yield savings accounts have no monthly maintenance fees. Minimum deposit requirements vary by bank, but the best high-yield savings accounts have no minimum balances. Variable APYs can change based on market conditions, while fixed rates stay the same. The Federal Reserve is the central bank of the United States and sets the federal funds target rate that influences deposit account rates.

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Frequently Asked Questions about Savings Accounts

Compound interest is earning interest on your interest. It's a powerful way to grow your savings. Interest earned on savings accounts is taxable income, and your bank will send you a Form 1099 if you earn more than $10 in interest. There is no best type of interest rate; fixed rates stay the same, while variable rates can change. Banks make money by charging higher interest rates on loans than they pay on deposits. Online banks and digital accounts pass along savings in the form of higher APYs. Your money is safe with an online-only neobank or digital account as they are FDIC-insured. Look for terms like "member FDIC" when comparing your options.