What Interest Rates You'll Actually See on Bank Accounts

The lowest rates you'll find depend on the account type and the bank

There is no single "lowest interest rate" — what you earn depends on what kind of account you open and which bank you use. A savings account at one bank might pay 4.5% while another pays 0.01%. A money market account at the same bank might pay more than its savings account. A certificate of deposit (CD) might pay even more, but only if you lock your money away for months or years.

The rates also change constantly. Banks raise and lower what they pay based on what the Federal Reserve does with its own rates. A rate that is the lowest today might be middle-of-the-road next month, or higher than most competitors. This means the "lowest" rate is really a moving target — what matters is understanding what you are comparing and why the differences exist.

Key Takeaways

Savings accounts typically pay less than money market accounts or CDs at the same bank, even though all three are safe places to keep money.
Online banks usually pay higher rates than brick-and-mortar banks because they have lower operating costs.
The rate you see advertised is only may provide for new deposits — many banks lower rates on existing balances without warning.
CDs lock your money for a set time period (three months to five years) in exchange for a higher rate, and withdrawing early usually costs you interest.
Checking accounts almost never pay interest, or pay so little (under 0.01%) that it rounds to zero.

Why different account types pay different rates

Banks pay you interest because they use your deposit to lend money to other customers. The more freely they can use your money, the more they can afford to pay you. A checking account lets the bank use your money instantly and without restriction, so they pay almost nothing. A savings account restricts how often you can withdraw, so the bank can count on having your money longer — they pay more. A CD locks your money for a fixed term, so the bank knows exactly when they will have to return it — they pay even more.

The bank also has to make a profit on the spread between what they pay you and what they charge borrowers. If they pay you 4% on a CD, they might charge borrowers 7% or 8% on a mortgage or auto loan. The difference is how the bank covers its costs and makes money. This is why you will never see a bank paying you 10% on a savings account — they cannot afford to.

Online banks versus traditional banks

Online banks almost always pay higher rates than banks with physical branches. A traditional bank with hundreds of locations has to pay rent, utilities, and staff salaries at each one. An online bank has one or two data centers and a customer service team. That lower cost structure means they can afford to pay you more of what they earn from lending.

In practice, this means an online savings account might pay 4.5% while a traditional bank's savings account pays 0.5% for the exact same type of account. The money is equally safe at both — the Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 at any bank, online or not. The only real difference is the rate and how you access your money. Online banks have no branches, so you deposit by mail or transfer, and you withdraw by transfer to another account.

How banks change rates on existing accounts

When you see an advertisement for a high rate, read the fine print carefully. Most banks may provide the advertised rate only on new money you deposit. If you already have money in the account, the bank can lower your rate without your permission — they just have to notify you first, usually 30 days ahead.

This happens constantly. A bank might advertise 4.5% to attract new customers, but existing customers earning 4.5% might see their rate drop to 3.8% a few months later. The bank is not breaking any rule — the disclosure you signed when you opened the account allows this. If you want to keep earning the higher rate, you usually have to move your money to a different bank or a different account type at the same bank.

CDs pay more but lock your money away

A certificate of deposit (CD) is a time-locked savings account. You agree to leave your money untouched for a set period — typically three months, six months, one year, three years, or five years. In exchange, the bank pays you a higher rate than a regular savings account. A one-year CD might pay 4.8% while a savings account at the same bank pays 4.2%.

The catch is that if you need the money before the term ends, you pay an early withdrawal penalty. This penalty is usually a certain number of months of interest — for example, a one-year CD might charge three months of interest if you withdraw after six months. That means you lose money compared to just leaving it in a savings account. Some banks offer "no-penalty CDs" that let you withdraw without a fee, but they pay lower rates to offset that risk.

Money market accounts sit between savings and CDs

A money market account combines features of a savings account and a checking account. It usually pays more interest than a savings account but less than a CD. In exchange, it often comes with a debit card or checkbook, so you can access your money more easily than with a regular savings account.

Money market accounts also have withdrawal limits — federal rules used to cap withdrawals at six per month, though that rule has been relaxed. Some banks still enforce their own limits. The rate is not locked in like a CD, so the bank can lower it on existing balances. If you want to compare rates, look at what each bank is currently paying on its money market account, just as you would for a savings account.

What to do if you want the best rate available

Start by deciding how long you can leave the money untouched. If you might need it within a year, a savings account or money market account makes more sense than a CD. If you know you will not touch it for two years, a two-year CD will almost always pay more.

Then compare rates across banks. Websites like Bankrate, DepositAccounts, and the banks' own websites show current rates. Look at the rate for the specific account type and term you want — do not compare a one-year CD rate to a savings account rate and expect them to be similar. Check whether the rate applies to new money only or to your whole balance. Read the disclosure to see what the bank can do to your rate after you open the account.

Remember that the highest rate today might not be the highest rate next month. If rates are rising (which happens when the Federal Reserve raises its rates), you might want to lock in a CD now. If rates are falling, you might want to stay in a savings account where you can move your money if a better rate appears elsewhere.

Frequently Asked Questions

Can I get a negative interest rate on a savings account?

No. In the United States, banks do not charge you to hold money in a savings account. Some banks charge monthly maintenance fees if your balance falls below a minimum, but that is different from negative interest. In some other countries, banks do charge negative rates, but that does not happen here.

Why do checking accounts pay almost no interest?

Checking accounts are designed for frequent deposits and withdrawals, so the bank cannot reliably count on having your money available to lend. Banks make their money on checking accounts through monthly fees and overdraft charges, not through lending out the balance. A few online banks offer checking accounts with modest interest (0.5% to 1%), but these are rare.

Is the rate I see advertised may provide to stay the same?

Only if you have a CD with a fixed term. The bank locks in the rate for the entire period. For savings and money market accounts, the bank can lower your rate on existing money with 30 days' notice. New promotional rates are usually may provide only on new deposits, not on money already in the account.

What happens to my interest if I move my money to another bank?

You keep the interest you have already earned up to the day you withdraw. If you earned $50 in interest and then moved your money, you get the $50 plus your original deposit. The new bank starts calculating interest from the day the money arrives in your new account at their rate.

Do I pay taxes on the interest I earn?

Yes. Interest is taxable income. Banks send you a 1099-INT form at the end of the year showing how much interest you earned, and you report that on your tax return. This is true even if the interest is small — if you earned $10 in interest, you still report it.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.