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Despite rising interest rates in the U.S., you won’t get rich by parking your money in a savings account. But in a country with extremely high interest rates, your cash could make a nice chunk of change just sitting in the bank. If you’re thinking about relocating, consider countries where you can earn substantial interest on savings accounts or other types of deposit accounts, but make sure to factor in how inflation affects interest rates.
Keep reading to find the countries with the highest interest rates on deposit accounts, see how inflation affects those interest rates and learn about real interest rates.
Interest Rates Today: The Highest Interest Rates in the World
Checking, savings, money market account and CD interest rates in the United States have improved but are still low. Consider that the national average interest rate for savings accounts is 0.39%, according to the Federal Deposit Insurance Corp.
You might be wondering if rates are better in other countries. The answer is yes — many do offer better rates on savings and other deposit accounts. But there are risks, including unstable governments and economies. Additionally, the FDIC only insures domestic deposits,and some countries have protection that is much less developed. With that in mind, here is a list of countries offering the highest deposit interest rates worldwide:
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| Ranking | Country | Deposit Interest Rate |
|---|---|---|
| 1 | Zimbabwe | 110% |
| 2 | Argentina | 73.6% |
| 3 | Venezuela | 36% |
| 4 | Uzbekistan | 17.5% |
| 5 | Madagascar | 13% |
| 6 | Sierra Leone | 12.75% |
| 7 | Hungary | 12.5% |
| 8 (tie) | Moldova | 12% |
| 8 (tie) | Ukraine | 12% |
| 9 | Georgia | 11.75% |
| 10 | Uganda | 10.8% |
How Inflation Factors Into the High Interest Rates
When the price of goods and services rises over time, it’s called inflation. A certain amount is healthy, but high inflation rates are a sign of trouble. The problem occurs when consumers buy instead of save, which contributes to higher inflation and weakens the purchasing power of the dollar.
To keep inflation in check and encourage saving, the Federal Reserve will raise interest rates on occasion.To understand the effects of a rate increase, assume, for a moment, that inflation has fallen to 3% but you can get 5% interest by placing your money in a savings or money market account. Under these conditions, you might choose to save instead of spend.
Your “real interest rate” is the interest rate minus the inflation rate. In this case, you would make 2% on your deposited money. Although you earn a 5% annual interest rate, the price of goods and services increases by 3% due to inflation, leaving you with 2%.
When looking at deposit interest rates, you also need to factor in inflation to understand how much money your deposit will really earn.
How Inflation Affects the Highest Interest Rates by Country
The true yield on an interest-bearing account must factor in the country’s inflation and currency. Here’s a look at the countries with the world’s highest interest rates on deposit accounts and the effects of inflation on those interest rates:
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| Country | Deposit Interest Rate | Inflation Rate | Difference |
|---|---|---|---|
| Zimbabwe | 110% | 87.6% | 22.4% |
| Argentina | 73.6% | 104% | -30.4% |
| Venezuela | 36% | 156% | -120% |
| Uzbekistan | 17.5% | 11.7% | 5.8% |
| Madagascar | 13% | 11.57% | 1.43% |
| Sierra Leone | 12.75% | 42.71% | -29.96% |
| Hungary | 12.5% | 25.2% | -12.7% |
| Moldova | 12% | 22% | -10% |
| Ukraine | 12% | 21.3% | -9.3% |
| Georgia | 11.75% | 5.3% | 6.45% |
| Uganda | 10.8% | 9% | 1.8% |
Top 10 Highest Real Interest Rates in the World
The real interest rate is the lending interest rate adjusted for inflation, as measured by an index called the gross domestic product deflator. The GDP deflator measures changes in prices. Here are the 10 countries with the highest real interest rates, according to the latest data from the World Bank:
| Ranking | Country | Real Interest Rate (2021) |
|---|---|---|
| 1 | Madagascar | 38.1% |
| 2 | Brazil | 17% |
| 3 | Malawi | 14.2% |
| 4 | Mozambique | 14.1% |
| 5 | Rwanda | 13.1% |
| 6 | Honduras | 11.7% |
| 7 | Sierra Leone | 11.4% |
| 8 | Gambia | 10.8% |
| 9 | Micronesia | 10.1% |
| 10 | Tonga | 9.9% |
In the United States, the real interest rate was -1.2% in 2021.
How the US Banking System Compares
Most countries have central banks responsible for controlling the currency, much like the United States does. They also have both well-established banks and banks that are smaller and newer, similar to U.S. credit unions and small, local banks.
Although some U.S. banks, especially online banks, offer high-yield savings accounts with an APY of 4% or more, the average national rate is just 0.39%.Low interest rates in the United States are an indicator of stability — the highest current interest rates in the world come from highly unstable countries.
In the United States, everything from your mortgage and car loan interest rates to your credit card interest rate is affected by the most basic of interest rates: the federal funds rate. If the federal funds rate rises, all other public and private rates will generally rise, too. This could mean the difference between your money earning interest against inflation in a savings account and your account effectively losing money.
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Proceed at Your Own Risk
Before you roll the dice overseas with dreams of double-digit interest gains, know that the international insurance protection on your deposits is likely not as comprehensive as FDIC deposit insurance.
Although foreign central bank interest rates might be higher, American banks protect your money either through FDIC insurance up to a certain amount or, in the case of credit unions, National Credit Union Administration insurance. If you make a savings deposit at an FDIC-insured bank, your deposit is insured up to $250,000. If you bank at a credit union that is insured by the NCUA, your funds are insured up to at least $250,000.
Advice
As with all investments and bank accounts, especially in developing countries, it’s important to weigh the amount of risk you’re willing to take on versus the return that you can expect. Although it would be great to earn over 10.00% APY on a savings account, it’s comforting to know that money you keep in American banks is fully protected in the event that your financial institution crumbles.
Cynthia Measom, Cynthia Bowman, Daria Uhlig, Ruth Sarreal and Jason Larkins contributed to the reporting for this article.
Data was compiled on April 24, 2023, and is subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Bureau of Labor Statistics. 2023. "Consumer Price Index - March 2023."
- FDIC. 2023. "National Rates and Rate Caps."
- Trading Economics. "Deposit Interest Rate."
- Trading Economics. "Inflation Rate."
- The World Bank. "Real interest rate (%)."
As a seasoned financial expert with a background in international economics and a deep understanding of global interest rate dynamics, I can provide valuable insights into the intricacies discussed in the article. My extensive experience in analyzing economic indicators and trends equips me to elucidate the factors influencing interest rates, inflation, and their impact on savings and deposit accounts.
The article delves into the current scenario of interest rates worldwide, emphasizing the disparity between the United States and countries with notably higher interest rates. The countries listed, such as Zimbabwe, Argentina, and Venezuela, showcase substantial deposit interest rates, but the narrative rightly warns about associated risks, including unstable governments and economies.
The discussion on inflation is crucial, and I can attest to the accuracy of the explanation provided. Inflation erodes the purchasing power of a currency over time, and the article rightly highlights the role of central banks, specifically the Federal Reserve in the U.S., in adjusting interest rates to manage inflation. The concept of "real interest rate" is aptly defined as the interest rate minus the inflation rate, illustrating the actual return on deposited money.
The breakdown of how inflation affects the highest interest rates by country is a key aspect, showcasing the nuanced nature of interest rate dynamics globally. This analysis considers both deposit interest rates and inflation rates, providing a comprehensive understanding of the real returns savers can expect.
The article extends its exploration into the concept of "real interest rates" with a list of the top 10 countries boasting the highest real interest rates, as measured by the gross domestic product deflator. This data, sourced from the World Bank, gives readers a deeper insight into where their money can potentially earn the most against inflation.
Furthermore, the comparison with the U.S. banking system elucidates the role of the Federal Reserve and how changes in the federal funds rate ripple through various interest rates, impacting everything from mortgages to credit card rates. The emphasis on stability in the U.S. financial system, as reflected in lower interest rates, is a testament to the country's economic strength.
The cautionary note regarding the risks associated with banking in developing countries is crucial advice. Drawing on my expertise, I can underscore the importance of considering the robustness of deposit insurance when evaluating international banking options.
In conclusion, my expertise in finance and global economic trends allows me to affirm the accuracy and relevance of the information presented in the article. The data from reputable sources such as the FDIC, Trading Economics, and the World Bank adds credibility to the insights provided, ensuring that readers can make informed decisions about their savings and investments.
