Many Banks Pay High Rates on Savings. So Why Aren’t You Moving Your Money? (2024)

If you are keeping a good amount of spare cash in a basic savings account at a big bank, you are missing out.

After paying paltry rates for years, many banks — especially online institutions — are paying higher rates on federally insured savings accounts and certificates of deposit. Yields have risen as the Federal Reserve has increased its benchmark rate in an effort to tame high inflation.

The nation’s biggest banks, on the other hand, have kept interest rates low. Flush with money people deposited early in the pandemic and seeing lower demand for borrowing because of higher interest rates on loans, they have had little incentive to attract more money.

The online banks aren’t offering savings account rates that keep pace with inflation, which slowed to 6.5 percent on an annual basis in December. But many now offer savings accounts with annual percentage yields of 3.3 percent or higher, and 4 percent or higher on one-year certificates of deposit. At least one bank recently began advertising a 5 percent savings account rate, according to DepositAccounts.com.