Interest rates change every day, and where you look matters

The interest rate you see advertised right now is not the rate you saw yesterday, and it will not be the same tomorrow. Banks, credit unions, and online lenders set their own rates based on what the Federal Reserve does, what their competitors offer, and how much it costs them to borrow money. The "current rate" you find depends on which bank you check, what type of account you are opening, and sometimes even how much money you deposit.

You cannot find one single interest rate because there is no single rate—there are hundreds. A savings account at your local bank might pay 0.01 percent while an online bank pays 4.50 percent for the same type of account. A money market account at one credit union might pay more than a certificate of deposit at another. The only way to know what you can actually earn is to check the specific banks and account types you are considering.

Key Takeaways

  • Interest rates vary by bank, account type, and deposit amount, so you must check multiple banks to compare what you can earn.
  • Online banks typically pay higher rates than brick-and-mortar banks because they have lower overhead costs.
  • The Federal Reserve's rate decisions influence what banks pay, but each bank sets its own rate independently.
  • Rates change frequently, so a rate you see one day may be different by next week or even the next day.
  • Your rate is locked in when you open the account, but banks can change the rate on existing accounts with notice.

Where to check rates right now

Start by visiting the websites of banks you already use or recognize. Most banks display their current rates on the homepage or in a savings or rates section. Write down the rate, the account type (savings, money market, CD), and the minimum deposit required. Do this for at least three banks so you have something to compare.

Online banks almost always show higher rates than traditional banks because they do not pay for physical branches, tellers, or as much staff. Banks like Marcus, Ally, and American Express Bank publish their rates openly on their websites. Credit unions also publish rates, though you may need to be a member or meet other requirements to open an account. Your credit union's website will tell you whether you are already a member or how to join.

Do not rely on rate comparison websites alone—they update slowly and sometimes show outdated numbers. Use them to get a general sense of what is available, then visit the actual bank websites to confirm the current rate before you decide.

Why rates are different at different banks

Banks do not all pay the same rate because they are not all the same business. A large national bank with thousands of branches has much higher costs than an online bank with no physical locations. Those costs come out of what they can afford to pay you. A credit union is owned by its members and may prioritize paying higher rates to savers. A small local bank might pay more to attract deposits in your area.

The Federal Reserve sets a target interest rate that influences what banks charge borrowers, but it does not set the rate banks pay depositors. When the Federal Reserve raises its rate, banks usually raise what they pay on savings accounts within a few weeks. When the Federal Reserve cuts its rate, banks usually cut what they pay depositors faster than they cut what they charge borrowers. This is why rates on savings accounts can drop quickly but rise slowly.

How the rate you see becomes your rate

When you open a savings account or buy a certificate of deposit, the rate advertised at that moment is the rate you lock in. If you open a savings account at 4.50 percent, you earn 4.50 percent on that money for as long as you hold the account—even if the bank drops its rate to 3.00 percent next month. Your rate does not change unless the bank changes it, and banks can only change rates on existing accounts with advance notice (usually 30 days).

Certificates of deposit work differently. When you buy a CD, your rate is locked in for the entire term—whether that is three months, one year, or five years. The bank cannot change your rate during that time. When your CD matures, you can renew it at whatever the current rate is, or move your money elsewhere.

Money market accounts and regular savings accounts are different. The bank can change the rate on these accounts at any time with notice. This is why rates on savings accounts can drop suddenly—the bank is allowed to lower what they pay you.

What affects whether you get the advertised rate

Most banks advertise one rate and pay that rate to everyone who opens the account, but some have tiered rates based on how much you deposit. A bank might pay 4.00 percent on balances up to $25,000 and 4.25 percent on balances above that. Read the fine print on the bank's website to see whether the rate changes at different deposit levels.

Some banks also offer promotional rates for new customers only. A bank might advertise 5.00 percent for the first three months, then drop to 3.50 percent after that. These promotions are real, but they are temporary. Make sure you understand when the promotional rate ends and what your rate will be after that.

A few banks require you to meet other conditions to earn the advertised rate—like setting up direct deposit or maintaining a minimum balance. These conditions are usually stated on the rate page, but call the bank if you are not sure.

How to use current rates to make a decision

Comparing rates is straightforward: higher is better. A savings account paying 4.50 percent will earn you more money than one paying 2.00 percent, assuming you leave the money in the account for the same amount of time. The difference adds up quickly on larger balances.

But rate is not the only thing that matters. Consider whether the bank is easy to use, whether you can withdraw money without penalty, and whether the bank is insured by the Federal Deposit Insurance Corporation (FDIC). Every bank you consider should be FDIC-insured—this protects your money up to $250,000 if the bank fails. You can check whether a bank is FDIC-insured on the FDIC's website.

If you are comparing certificates of deposit, also think about how long you can lock your money away. A five-year CD might pay more than a one-year CD, but you cannot touch the money without paying a penalty. Only choose a longer term if you know you will not need the money.

Why rates change and what to watch for

Interest rates move when the Federal Reserve changes its target rate, usually at scheduled meetings eight times per year. When the Federal Reserve raises rates, banks eventually raise what they pay on savings accounts. When the Federal Reserve cuts rates, banks cut what they pay depositors. You can find the Federal Reserve's meeting schedule on its website if you want to know when rate changes might happen.

Rates also change when banks compete for deposits. If one large bank raises its savings rate, competitors often follow within days or weeks. If you are shopping for a savings account, you might see rates jump around as banks adjust to stay competitive.

The economy also affects rates. During recessions, the Federal Reserve usually cuts rates to encourage borrowing and spending. During periods of high inflation, the Federal Reserve usually raises rates to cool down the economy. These moves eventually flow through to what banks pay you.

Frequently Asked Questions

Can I lock in a rate before I open the account?

No. The rate you see when you open the account is the rate you get. You cannot reserve a rate in advance. If you are waiting for a paycheck to arrive before you deposit money, the rate may have changed by then. Check the rate again right before you open the account.

What is the difference between APY and APR?

APY (annual percentage yield) is what banks show for savings accounts and CDs—it includes the effect of compounding, meaning interest earned on interest. APR (annual percentage rate) is what banks show for loans and credit cards. For savings accounts, always compare APY to APY. The APY is the real number that tells you how much you will earn.

If I move my money to a different bank, do I lose the rate I locked in?

Yes. Your rate is tied to that specific account at that specific bank. If you close the account and move the money to another bank, you earn whatever rate that new bank is currently paying. This is why it matters to choose a bank with a competitive rate when you open the account.

Why do online banks pay more than regular banks?

Online banks have much lower costs because they do not operate physical branches or employ as many staff members. They pass those savings on to customers by paying higher rates on deposits. The tradeoff is that you cannot walk into a branch to deposit cash or speak to someone in person.

Will rates keep going up or down?

Nobody can predict what the Federal Reserve will do, so nobody can predict whether rates will rise or fall. If you need the money within a year, a savings account is safer than a CD because you can move it if rates rise. If you are confident rates will fall, a longer-term CD locks in current higher rates.