Are you looking for a bank account that gives a little back? Why not get a savings account? Savings accounts accrue interest, which basically means the bank pays you to house your money. The exact interest rate varies by bank.
We’ve pulled together some information and statistics to help you determine the best path for you and your individual financial situation. Our guide will help you shop for the right savings account for your needs.
Average National Interest Rates for Savings Accounts
Every bank offers its own interest rate on savings accounts, so it can be helpful to compare interest rates side by side. We created a table of average interest rates by bank so you can compare apples to apples — or in this case, percentages to percentages.
The more traditional brick-and-mortar banks such as Bank of America and Wells Fargo offer lower average savings account interest than online banks like Credit Karma, Ally and Synchrony.
|Bank||Savings Account Interest Rate|
|Bank of America||0.03%|
|Citibank||0.04% – 0.15%|
Average National Interest Rates for Checking Accounts
Interest on checking accounts tends to be lower than on savings accounts. You’re not guaranteed to receive interest on your checking account, but if you do, know that it’s going to a fairly low percentage. Here are some checking account interest rates offered by a clutch of major banks.
These banks typically offer low interest rates for checking accounts. They range around 0.01% — the exception is Capital One, which offers 0.20% interest on checking accounts.
|Bank||Checking Account Interest Rate|
|Bank of America||0.01%|
|Synchrony||Does not offer checking accounts|
Why Do Some Banks Have Higher Interest Rates for Savings Accounts?
As you can see, savings interest ranges significantly across institutions. Credit Karma’s savings account offers 1.75% interest. Larger traditional institutions such as Bank of America and Wells Fargo only offer 0.03% and 0.01%, respectively.
Why do interest rates vary so much? They’re dependent on customers and how much banks themselves are motivated to promote savings accounts. They’re also influenced by market fluctuations.
Many of the highest-yield savings accounts are online-only. These include Ally Bank, Credit Karma and Synchrony Bank, all of which offer savings account interest rates in excess of 1.5%. Compare this to more traditional brick-and-mortar banks such as Chase and Citibank, which offer a respective 0.01% and 0.04% rate.
Some high-yield savings accounts have requirements and fees. For example, you may have to maintain a minimum balance in order to continue your eligibility for a given interest rate. These accounts may also require you to pay maintenance fees.
Make sure you calculate whether your maintenance fees amount to more than your anticipated interest. Investor.gov’s compound interest calculator will help you make that determination. Plug in the amount of your initial investment and contribution, interest rate and compound frequency and you should be able to figure out whether a given savings account is worth the fees.
Choose the Right Savings Account for You
A savings account could be a desirable part of your portfolio even if it’s less profitable than other types of investment choices. As with any other financial decision, do some research before you make your final decision.