7 Best Savings Rates of January 2024 (Up to 5.35%)

More about best savings rates

Benefits of the best savings rates

The best savings rates are much higher than the national average rate, which is just 0.46%.

Money in a high interest rate savings account grows faster over time. A deposit of $10,000 would earn about $40 after a year in an account with a 0.40% APY. But that same deposit would earn about $500 in an account with a 5% APY.

Here's how to choose the highest interest rates

Look for accounts that have the highest APY. Some accounts require deposit minimums to get the best yields. Others might charge monthly fees if the balance falls below a certain amount. If possible, choose an account that minimizes charges. Fees cancel out the benefits of high interest rates.

» Find high rates across checking, savings and other accounts in NerdWallet's list of high-interest accounts.

Where can I earn the most interest on my money?

Online banks and nonbank providers (often apps that partner with a bank for FDIC coverage) tend to offer higher interest rates than traditional brick-and-mortar banks. Rates can go up or down at any time, however, and some institutions have been lowering their APYs to reflect market conditions. Keep a close eye on NerdWallet's list of the best online savings account interest rates to monitor these changes.

Why you earn interest on savings accounts

You earn interest from a savings account because the institution is paying you to lend it money. Your funds are used in its loans to other customers. Credit unions have a similar process, but they call interest “dividends.”

What’s the difference when NerdWallet notes “Member FDIC” vs. “funds insured by FDIC” on savings accounts?

When we describe a savings account that is offered by a bank, we note “Member FDIC,” since the bank is a member of the Federal Deposit Insurance Corp. and the account is federally insured. If a financial technology company — not a bank — offers a savings account, it typically partners with a bank that is an FDIC member to hold the funds so deposits can be insured. In those cases, we note “funds insured by the FDIC.” Savings accounts at credit unions are federally insured by the National Credit Union Administration, so we note “funds insured by the NCUA.”

Full list of editorial picks: best savings rates

Here are all of NerdWallet's picks for the best savings account interest rates. The overall rating includes multiple data points, including savings account features, customer service and app store ratings.

Affirm, 4.35% APY (read full review), funds insured by FDIC. NerdWallet overall institution rating: 3.5 stars.
American Express, 4.35% APY (annual percentage yield) as of 12/14/2023, (read full review), Member FDIC. NerdWallet overall institution rating: 4.0 stars.
Barclays, 4.35% APY (read full review), Member FDIC. NerdWallet overall institution rating: 4.0 stars.
Bask Bank, 5.10% APY, (read full review), Member FDIC. NerdWallet overall institution rating: 4.0 stars.
BMO Alto, 5.10% APY (read full review), funds insured by FDIC. NerdWallet overall institution rating: 4.5 stars.
Bread Savings, 5.15% APY (read full review), Member FDIC.* NerdWallet overall institution rating: 4.5 stars.

*Bread Savings disclosure

1. Best Savings Rates and Their Benefits:

The article emphasizes that the best savings rates surpass the national average rate of 0.46%, showcasing a substantial difference.
High-interest savings accounts enable faster growth over time. A clear example is given, illustrating the contrast between a 0.40% APY and a 5% APY on a $10,000 deposit.

2. Choosing High-Interest Rates:

The key advice is to look for accounts with the highest Annual Percentage Yield (APY).
Some accounts may require minimum deposits for optimal yields, while others might have monthly fees for low balances. It's recommended to choose an account that minimizes charges to fully capitalize on high-interest rates.

3. Where to Earn the Most Interest:

Online banks and nonbank providers, often partnering with banks for FDIC coverage, tend to offer higher interest rates compared to traditional brick-and-mortar banks.
Rates are subject to change, and staying informed about market conditions is crucial. The article suggests keeping track of NerdWallet's list of the best online savings account interest rates.

4. Why You Earn Interest on Savings Accounts:

Savings account holders earn interest because the financial institution pays them for lending money. The deposited funds are used in loans to other customers.

5. FDIC and NCUA Insurance:

Differentiating between "Member FDIC" and "funds insured by FDIC," the former applies to savings accounts offered by banks directly, ensuring federal insurance. The latter refers to financial technology companies partnering with banks for FDIC coverage.
Savings accounts at credit unions are federally insured by the National Credit Union Administration (NCUA).

6. List of Best Savings Rates (Editorial Picks):

The article provides a comprehensive list of NerdWallet's editorial picks for the best savings account interest rates. Each entry includes the APY, a brief review, and the overall institution rating.
Notable entries include Bask Bank with a 5.10% APY, BrioDirect with a 5.35% APY, and Upgrade with a 5.07% APY.

This information is valuable for anyone seeking to optimize their savings by choosing accounts with the best rates and understanding the factors that contribute to effective savings management.

7 Best Savings Rates of January 2024 (Up to 5.35%) - NerdWallet (2024)