To combat inflation, the Federal Reserve has been continuously hiking interest rates in an attempt to drive spending down as consumers realize higher commercial interest rates on mortgages, credit card APRs and other loans. The Fed's last rate hike raised interest rates by 0.25%, bringing the federal funds rate to a target range of 5.0%-5.25%. There is a silver lining, however — as the federal funds rate increases, interest rates on high-yield savings accounts and CDs typically do too. Offering a high APY (annual percentage yield) on accounts is an effective way for banks to compete for customers and attract deposits.
Savings interest rates have been steadily rising since March of last year, but this could soon change. The Fed could put a pause to raising rates at their next meeting, meaning savings rates will likely peak before leveling off. Therefore, some experts recommend to lock in savings rates now to take advantage of the best APYs.
Our new comparison tool — in partnership with Bankrate — will help you find the best rates available now.
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How to find the best savings rates
Compare high yield rates online: Online banks typically offer more generous APYs on savings accounts, so banking online could help you get the best savings rate possible. So, changing from your traditional savings account at a brick-and-mortar bank to an online one might be a good option.
Avoid teaser rates and tiered interest rates: Teaser rates are promotional rates banks use to attract new customers, but these rates are typically short-lived. Tiered interest rates pay a different yield based on the balance in your account, but if you plan on using your savings at some point, opting for an account with a flat APY is likely a better choice.
Take into account any fees: While high-yield savings accounts do offer higher than average APY on deposits, some have strings attached. Some high-yield accounts will have fees or balance requirements that could potentially decrease their overall value, so it's important to consider this to find the best options.
Here are some of the best earning high-yield accounts for May 2023.
UFB Direct: 4.81% APY $0 minimum opening deposit No monthly fee
Popular Direct: 4.75% APY $5,000 minimum opening deposit No monthly fee
Bask Bank: 4.75% APY $0 minimum opening deposit No monthly fee
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