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As the old saying goes: What goes up, must come down. But in the case of annual percentage yields (APYs), we might have a bit more air time.
While APYs on deposit accounts may have come down from their peak in recent years, plenty of banks and credit unions are still offering stellar yields, making it a great time to open a new account.
Here’s how you can take advantage of these yields to maximize your savings right now.
Key takeaways
- Online banks are still paying robust yields on deposit accounts, including certificates of deposit (CDs) and savings accounts.
- With inflation now a fresh concern and the Federal Reserve potentially pausing rate cuts, it’s possible APYs will remain elevated for some time longer.
- To make the most of high CD yields, shop around by comparing rates, terms and withdrawal limits across banks and credit unions.
APYs are still high at online-only banks
In a rapidly changing financial landscape, one thing remains clear: online-only banks offer some of the highest APYs on the market, particularly on savings accounts and CDs. Online banks tend to provide better rates because they have lower overhead costs, as they don’t pay for physical branches or in-person customer service staff. Some of the largest brick-and-mortar banks offer a paltry 0.01 percent APY on savings, while online banks are paying 4 percent or more.
APYs have been elevated ever since the Federal Reserve hiked the federal funds rate to combat inflation, with CD rates reaching peaks not seen in more than a decade. That’s because when the Fed raises the federal funds rate, institutions tend to react by increasing their APYs to attract and retain depositors. And while yields have started decreasing in response to cuts in the fed rate, the central bank’s chair, Jerome Powell, indicated that the Fed isn’t in a rush to continue slashing rates. Especially as inflation becomes a fresh concern due to President Trump’s tariffs, experts anticipate no change to the federal funds rate in March.
This all means that APYs may remain elevated for some time to come, especially at online-only banks.
How to take advantage of high APYs at online banks
For consumers looking to make the most of the high APYs offered by online-only banks, the first step is to shop around for a good account. Some things to compare include:
- Conditions: Some online-only banks may offer tiered APYs, where higher balances earn better rates, but many competitive accounts pay a robust rate regardless of your balance. If you don’t want to worry about keeping a certain amount in your savings to guarantee a good rate, find an account without tiers.
- Rates: Look for a rate leagues above the national average for savings accounts, which is 0.6 percent APY as of March 14, 2025. Yields on the best high-yield savings accounts currently hover around 4 percent APY.
- Ease of accessing funds: Some banks limit the amount of withdrawals you can make out of your savings per statement cycle. Going above that limit could mean you’ll be charged a fee. So, if you want a savings account that you can regularly dip into, find a bank that has a high withdrawal limit — or none at all.
- Quality of digital tools: Popular digital features include automatic transfers and robust personal finance management tools. Some banks are even leveraging artificial intelligence (AI) to provide better financial guidance, including algorithms with predictive tools that can analyze spending patterns and forecast upcoming expenses.
- Customer support: Many online banks offer chat or messaging support and some have 24/7 phone support, while others might have more limited phone hours. Make sure the account you choose comes with customer support hours and methods that work for you.
When it comes to CDs, the “best” one for you will depend on the term you’re interested in and how much cash you have on hand to deposit. Luckily, many online-only banks require a low or no minimum deposit to open an account.
If you’re worried about tying up your money, look into no-penalty CDs, which allow you to make at least one withdrawal without paying an early withdrawal penalty. If you think you may need to withdraw money before your CD matures, this may be a good option.
Pro tip
If you already have a savings account but want to open a new, better one to take advantage of high rates, go for it. You can close the old account after you’ve opened the new one (or keep both, if you need to). Plus, you can likely open your new account online in just a couple of minutes if you have the required documents handy.
Bottom line
Online-only banks continue to offer high yields, making them an attractive option for savers looking to grow their money. How long APYs will remain elevated will depend on a host of macroeconomic factors, including the length of the Federal Reserve’s pause on cutting interest rates. Whether you’re saving for a rainy day or looking for a place to park longer-term funds, opening a high-yield savings account or CD can be an efficient way, especially right now, to make your money work harder for you.
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