The average savings account interest rate is less than 1%, but it's not hard to earn more on your money

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The average savings account in the US has an interest rate of .06% as of May 26, according to data from the Federal Deposit Insurance Corporation, or FDIC. 

Most savings accounts earn a small amount of interest that's calculated as a percentage of the balance. The higher the interest rate, the more the account will earn each year. Most savings accounts earn compound interest, which means that money will grow each month based on the total balance, including the previous monthly earnings.

It's worth noting that interest rates change often. Banks move their interest rates in step with the federal funds rate — the amount the Federal Reserve charges banks to borrow money. When the federal funds rate goes down, interest rates do as well, and vice versa.

There are several other factors that can sway interest rates, too. The type of bank where you open your account may also have an effect. At chain, brick-and-mortar banks, it's not uncommon to see lower interest rates than the average.

Here are some the savings account interest rates offered on all balance tiers for the most basic accounts at major banks as of May 2020:

BankInterest rate (APY)
Chase savings.01% 
Bank of America savings.01%
Wells Fargo savings.01%
BB&T savings.01%
Regions savings.01%
SunTrust savings.01%
US Bank savings.01%
PNC savings.03%
HSBC savings.01%
TD Bank savings.05%
Fifth Third Bank savings.01%
Bank of the West savings.01%
Santander savings.03%
Citibank savings0.04% - 0.15%

 

With the average savings account interest so close to 0%, it's hard to earn interest, whether your interest rate is .01% or .06%. A savings account of $10,000 that earns the national average interest rate would earn about $.06 per year.

But, you don't have to settle for such low interest rates: There's an easy way to earn more.

A high-yield savings account could help you earn more

Earning more interest is as easy as opening a new savings account. Move your savings from a traditional account to a high-yield savings account, and you'll start earning more. High-yield savings accounts earn multiple times more than a traditional savings account. We're not talking investment returns, here — more like 1% to 2%. That's along the lines of the rates you'd see with CDs, but with the flexibility to access your money when you need it.

The following are all high-yield savings accounts:

BankInterest rate (APY)
Capital One 360 HYS1.3%
Ally Bank HYS1.25%
Marcus by Goldman Sachs HYS1.3%
Vio Bank HYS1.5%
CIT Savings Builder HYS1.04% (Lower Tier)
Synchrony HYS1.3%

Like typical savings accounts, high-yield savings account interest rates change and fluctuate often. When the Federal Reserve lowered the federal funds rate over the past year, the interest rates on high-yield savings immediately took a hit. However, it's not a bad idea to open a high-yield savings account when interest rates are low and get into the habit of saving — when rates go back up again, you'll earn the higher rates on the balance you've amassed over time.

You don't have to settle for average rates in your savings account. A high-yield savings account could help you grow your money quicker and make your money work harder, without any cost or inconvenience to you.

Interest rates by bank type: Online vs. brick and mortar banks

Most high-yield savings accounts are available through online-only banks. They're mostly available through online banks, but you may already be familiar with several of the online banking services that offer these accounts, including Ally, Betterment, and Marcus by Goldman Sachs.

And, there's a big difference between the interest rates offered by brick and mortar banks and online banks. Online banks don't have the overhead that brick and mortar banks do, and that allows them to pass on more money in interest. Based on the interest rates collected above, the gap between average APYs from online banks and brick and mortar banks is wide. 

Bank TypeAverage APY
Online1.32%
Brick and mortar banks.016%
Overall.06%

While online banks have an average APY of 1.32%, brick and mortar banks average just .016% APY. If you're willing to work with an online-only bank, you could earn more interest than you would with a brick and mortar bank. 

Interest rates by balance

The amount of interest you earn could be influenced by the balance your account has. But, that will really vary based on what bank you're using. 

Overall, Federal Reserve data doesn't show a huge difference between a small balance of $2,500 and a balance over $100,000 — both have an average of .06% APY according to Federal Reserve data. 

There are a few banks that reward customers with a larger balance. But, there are quite a few that offer the same interest rates no matter the balance. 

BankBase APYMax APYBalance required for max APY
CIT Savings Builder HYS1.04% APY1.25% APY$25,000 or greater
Synchrony HYS 1.3% APY1.3% APYNo balance tiers
Ally Bank1.25% APY1.25% APYNo balance tiers
Capital One 360 Performance savings account1.3% APY1.3% APYNo balance tiers
Chase Bank savings account.01% APY.01% APYNo balance tiers
Regions Bank savings account.01% APY.01% APY No balance tiers

The balance you keep in your checking account could sway your interest rate. But at many banks, it won't make much difference. The bank you choose makes more of an impact than the amount you keep.