The national average rates for deposit accounts in the United States have been trending upward. However, there is a broad range of rates among financial institutions. Some offer yields that are many times more than the average, while others have rates way below. As a consumer, putting your money in accounts that earn more than their benchmarks means your balances can grow faster than in an average account.
Here are the current national average rates for deposit accounts from banks and credit unions, according to the Federal Deposit Insurance Corp.
Savings accounts, national average savings rate: 0.40%
The national average savings rate for savings accounts is 0.40%, per the FDIC, but you can find savings accounts that offer 10 times the national average. On the other hand, there are also savings accounts, particularly those at large national banks, that earn only 0.01%.
Why savings rates are important. If you’re trying to save for an emergency fund or a rainy day fund, it helps to deposit money in a federally insured account that earns as much as possible. Suppose you have $5,000 and deposit it into an account that has a 0.01% annual percentage yield. It would earn only $1 in interest after one year, for a total of $5,001 in your savings at the end of the year.
But put that same $5,000 into an account with a 4% APY and it would earn $204 in interest after one year, for a total of $5,204. You can use NerdWallet’s compound interest calculator to calculate other savings scenarios. (Skip ahead to read about the difference between interest rate and APY.)
Chase Bank, Chase Savings℠: 0.01% effective as of 02/10/2023. Interest rates are variable and subject to change.
Historical national rates
The chart below shows historical national rates for savings accounts, interest checking, certificates of deposit and money market accounts over the past 13 years.
Interest checking accounts, national average rate: 0.07%
The national average rate for checking accounts in the United States is 0.07%, according to the FDIC. Some of the top interest checking accounts earn much higher rates than the national average. There are also accounts that offer a high rate on cash-back rewards for debit card spending, but those are not considered in the interest rate average.
Why interest checking rates are important. If you want to earn interest on all the money you have in the bank, not just what you keep in your savings account, consider opening a checking account that earns a higher interest rate than the national average. You won’t reach the same APY heights you’d find with a high-yield savings account, but you’d still be earning interest. Because it’s important to keep a healthy amount of money in your checking account so that you don’t overdraft, you’re making sure that money is still working for you.
Note, though, that some interest checking accounts require you to jump through a few hoops to receive the maximum interest on the account, such as signing up for e-statements, spending a minimum amount on your debit card per month or directly depositing a certain amount of money per month. Make sure you’re willing to meet these requirements before signing up for an account.
Example interest checking APYs at select institutions
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 1.20% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.20% APY for savings. Members without direct deposit will earn 1.20% APY on all account balances in checking and savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 04/24/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Certificates of deposit, national average rate: 1.59% for one-year CDs
The national average rates for CDs are 1.59% for one-year CDs, 1.36% for three-year CDs and 1.37% for five-year CDs. The figures include rates for share certificates, which is what these types of deposits are called when offered by credit unions. The FDIC shows rates for eight CD terms ranging from one month to five years, though not all banks and credit unions offer each term.
Why CD rates are important.CDs traditionally have the highest rates among deposit accounts but also the most limits on accessing your money. CDs require that you deposit a fixed sum upfront for a set period, and you generally can’t add or withdraw money after the initial deposit. Withdrawing funds before a term ends often results in a penalty worth several months’ or even years’ worth of interest. For more access to funds, consider a high-yield savings account or interest checking.
Online-focused banks and credit unions tend to have the top CD rates, which can be several times higher than average CD rates. Use a CD calculator to determine the full return you can get. Because CD rates get locked in once you open a CD, one way to hedge against losing out on higher rates in the near future is to use a CD ladder: Open multiple CDs of varying term lengths at once, and each time a CD matures, open a new longer-term CD.
Example CD APYs at select institutions
All Bread Savings APYs are accurate as of 4/27/23. APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. To open a CD, a minimum of $1,500 is required and must be deposited in a single transaction. A penalty will be imposed for early withdrawals on CDs. At maturity, your CD will automatically renew and earn the base interest rate in effect at that time.
Money market accounts, national average savings rate: 0.59%
The FDIC national average savings rate for money market accounts, sometimes called money market deposit accounts, is 0.59%. Note: A money market account is a type of savings account, but when comparing MMAs to regular savings accounts, one key difference is MMAs sometimes come with the ability to write a few checks or make a few debit card purchases each month.
Money market accounts vs. other types of accounts. As with regular savings accounts, there is a range of APYs for MMA deposit accounts. Some earn as low as 0.01% APY, while others have yields that are much higher — around 4%. Money market accounts with competitive rates typically allow you to earn higher yields than checking accounts and may be on par with some of the best high-yield savings accounts, too. But because some come with check-writing and debit card features, they also give you easier access to your funds compared with CDs and savings accounts.
Example money market account APYs at select institutions
The difference between interest rate and APY
The interest rate is the amount of money your account earns, expressed as a percentage. Over time, the interest an account earns also earns interest. This is known as compounding. The amount of compound interest an account earns in one year is the annual percentage yield, or APY. It’s also expressed as a percentage.
The difference between interest rate and APY is that the interest rate accounts for interest only on the original balance, while APY represents the amount of interest earned on the original balance plus compound interest in one year.
Interest rate vs. APY example
Suppose you have $10,000 and earn an interest rate of 4.17% at a bank, paid after one year, without compounding. The amount of interest you earn is $417 ($10,000 x 4.17% = $417).
Now, instead of waiting one year, suppose the bank deposits a proportional share of the interest earned after one month. This means the total bank balance will be a little more than $10,000.
After the next month, the bank deposits another proportional share of interest. When that happens, the interest earned the previous month compounds, meaning that it also earns interest.
If the interest continues to compound each month at the same rate, then at the end of one year, the account would actually earn $425. This means that with compounding, the APY would be 4.25% ($10,000 x 4.25% = $425). You can use a savings calculator to calculate balance amounts and try other scenarios with daily, monthly and annual compounding.
So in this example, where interest is compounded monthly, the interest rate is 4.17% and APY is 4.25%.
When comparing accounts between financial institutions, it is generally better to use the stated APY instead of the interest rate because the APY accounts for compound interest.
How the FDIC calculates national rates
The FDIC calculates each national rate by taking an average of deposit account interest rates at insured banks and credit unions, where data is available. The averages are weighted based on each institution’s share of domestic deposits, or market share, so bigger institutions — whether brick-and-mortar or exclusively online — represent more of a national rate’s average than smaller institutions do.
Savings and interest checking account rates are based on a $2,500 balance, while CD and money market deposit account rates are based on an average of rates at $10,000 and $100,000 balances.
The FDIC’s current approach to calculations went into effect in April 2021, adding credit unions and internet-based institutions into the mix. Before then, national rates were averages weighted based on bank branches, which meant brick-and-mortar banks were disproportionately represented. The FDIC doesn’t include accounts with special features, such as rewards checking or those with cash bonuses, given insufficient data.
Depending on your needs, the right place for your deposits could be savings, interest checking, CDs, MMAs or a combination of these accounts. Wherever you deposit your funds, be sure to keep the account’s interest rate in mind. It is an important factor in helping you grow your bank balance and meet your financial goals.
