These days, many Americans are feeling a heavy sense of dread as headlines report on spiraling stock prices, President Donald Trump’s massive reciprocal tariffs and the possibility of recession. The negative economic news cycle has spurred worsening consumer sentiment. Many have been struggling with their expenses for some time, in fact, with more than 1 in 3 having to tap into their emergency savings in the past year.
While various national economic policies have changed seemingly overnight, some tried-and-true advice remains for anyone looking to protect their finances. One such piece of advice is to put your emergency fund in a federally insured high-yield savings account.
Here we’ll explore how to find the best savings account rate, along with how today’s macroeconomic conditions can impact the yields that banks offer on savings accounts.
Chances are, you can earn a higher savings account rate
Top high-yield savings accounts are currently earning an annual percentage yield (APY) of 4 percent or greater — although many Americans are settling for rates much lower than that. In fact, two-thirds of savers are earning an APY of less than 4 percent, in a previous online savings survey from Bankrate.
While shopping around for a high rate can help you earn an APY that’s around 400 times greater than that of the lowest-earning accounts, many consumers say they stick with the same bank account for the sake of convenience, such as to maintain branch availability and avoid the hassle of switching banks.
In reality, however, most bank accounts can be opened online in a matter of minutes, and it’s easy to find an online-only bank that offers an APY much greater than the national average savings account rate of 0.59 percent. Conversely, the biggest brick-and-mortar banks tend to offer rock-bottom rates, often as low as 0.01 percent APY.
“The additional return available on a high-yield savings account compared to the near-zero returns many banks are still paying is equivalent to free money,” says Greg McBride, CFA, Bankrate chief financial analyst. “You’re still protected by federal deposit insurance and can easily access the money by linking the account to your current checking account.”
Money tip: When searching for a savings account with a competitive yield, consider opening an account at an online-only bank. These banks typically pay higher than average yields, charge minimal or no fees and have low minimum balance requirements.
Choose a rate that outpaces inflation
These days, it’s not hard to find a savings account that outpaces inflation, which is currently at an annual rate of 2.8 percent, but that rate could possibly tick upward as a result of increased tariffs. Finding a high interest savings account with an APY above the rate of inflation ensures your money isn’t losing purchasing power.
Earning a competitive return in a high-yield savings account is your best shot at preserving the buying power of your money over time. You’ve worked hard to squirrel away every $1,000 in the account, and you want to make sure it still buys $1,000 worth of stuff when you need it.
— Greg McBride, CFA | Bankrate Chief Financial Analyst
While savings accounts with APYs north of 4 percent are ideal ways to save, and grow, your money, there are other high-yielding options to consider. A money market account, for example, is one such account for savers who want the benefit of a competitive savings account rate, along with some of the perks of a checking account. Money market accounts commonly come with a debit card and the ability to write a limited number of checks each month.
You can also find certificates of deposit (CDs) that earn rates higher than inflation. Top CDs currently yield between 4.15 percent and 4.50 percent APY across popular terms Bankrate monitors. CDs earn a guaranteed APY throughout their term, which can be beneficial if rates on deposit accounts fall in the meantime. However, CDs aren’t the best place for your emergency fund because they typically lock in your money for a set period of time, while charging a penalty for early withdrawals.
How the Federal Reserve influences bank account APYs
One factor that drives savings account rates is the Federal Reserve’s federal funds rate. When policymakers raise or lower this benchmark rate, banks tend to move their savings account APYs in the same direction.
The reason Fed officials may change the federal funds rate over time is to help achieve their dual mandate of:
- Price stability: inflation at a target rate of 2 percent
- Maximum employment: highest sustainable level of employment
For instance, officials may raise or lower this key rate — also known as tightening or loosening monetary policy — as a way of combating joblessness or high inflation.
Recent federal funds rate history
To help bring down soaring inflation, the Fed hiked the federal funds rate 11 times in 2022 and 2023. Yields on competitive savings accounts followed suit, with many topping 5 percent APY. Over a year later, the Fed reversed course and cut the federal funds rate three times in late 2024. This drove down savings account APYs somewhat, although officials’ decision to hold rates steady so far in 2025 could mean overall stability right now for savings account APYs.
How the federal funds rate could change in 2025
Near-term changes to the federal funds rate — and savings account APYs, in turn — could hinge on macroeconomic conditions that impact inflation and jobs.
The federal funds rate currently stands at a range of 4.25-4.5 percent. The market consensus is currently pricing in 1.0-1.25 percentage points in rate cuts this year by the Federal Reserve, following the market rout that stemmed from the recent tariff announcement, says Stephen Kates, CFP®, Bankrate financial analyst. Kates expects the Fed to remain in pause mode for multiple upcoming rate-setting meetings.
“Fed Chair Powell’s recent comments lead me to believe that he and the committee will prioritize fighting inflation first over rescuing the market or economy if economic growth slows,” he says. “Unemployment is still historically low. Barring a deep recession with unemployment rising above the historical average, I believe this continues to translate to rates being higher for longer. If inflation begins to rise more rapidly, I think the Fed will not hesitate to hold interest rates static through the summer.”
I don’t think even tariff-induced inflation can push inflation back to the heights of the post-pandemic environment. Therefore, the most likely scenario is a hawkish Fed that holds rates steady. If inflation abates due to falling consumer spending and reduced GDP, while unemployment rises, then I think the Fed will begin to cut again.
— Stephen Kates, CFP® | Bankrate Financial Analyst
Bottom line
Although top savings account rates are slightly lower than they were in mid-2024, you can still find APYs that are higher than they’ve been in over a decade, outside the current rate cycle — and, importantly, these top APYs are outpacing the rate of inflation. When insured by the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA), a high-yield savings account is a safe place to earn a competitive APY on your money. Otherwise, you run the risk of leaving money on the table as we continue to navigate choppy economic waters.
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