The Federal Reserve has cut its target rate three times in late 2024, leading to a decline in savings interest rates from their historic highs. With this change, it’s essential to shop around for the best savings account offers.
Currently, the national average savings account rate stands at 0.42%, according to the FDIC. However, some high-yield savings accounts are offering significantly higher rates, up to 4.35% APY. CIT Bank is one such partner that offers a 4.35% APY with a $5,000 minimum opening deposit.
To put this into perspective, consider how much interest you can earn from a savings account. The annual percentage rate (APY) determines your total earnings after one year. For example, if you deposit $1,000 at the average interest rate of 0.42% with daily compounding, your balance would grow to $1,004.21 in one year.
In contrast, a high-yield savings account offering 4% APY would result in a balance of $1,040.81 after one year, earning you $40.81 in interest. The more you deposit, the more interest you can earn. For instance, depositing $10,000 at 4% APY would yield $408.08 in interest.
As these rates may not be sustainable for long, consider opening a high-yield savings account now to take advantage of today’s high rates.
Source: https://finance.yahoo.com/personal-finance/article/savings-interest-rates-today-december-180149415.html