‘Banks are still very much in the mode of increasing their payouts.’ Many savings accounts are now paying 4%-4.5%. Here’s where.

After more than a decade of uber-low savings account rates, we’re finally seeing upward movement, as the Federal Reserve continues to raise rates. “The top-yielding, nationally available savings accounts are paying above 4%, and banks are still very much in the mode of increasing their payouts” says Greg McBride, chief financial analyst at Bankrate. “Not only are these accounts available nationwide, but many of the accounts yielding above 4% require no minimum deposit, so they’re literally available to everyone.” You can see some of the highest savings account rates you may get now here.

That said, if you haven’t switched banks recently, you may still be getting a paltry rate (more on that below). So pros say it’s worth shopping around, at least at this point in time (and psst: we even found a couple of savings accounts paying 5%).

The latest savings and MMA rates

Below are the latest average rates on savings accounts, according to data from Bankrate released on February 15, and then we chat with experts about how much you should be saving (yes, even in this high-inflation environment), where to put the money, and more. 

How much do you need in savings?

Inflation hit 6.4% in January, so you may be wondering: How much savings do I really need with inflation so high? Pros say you still need anywhere from 3-12 months of essential income in an emergency fund.

Factors like your age, marital status and career all play a part in exactly how much emergency savings you need. For example, “married couples still in their careers want between 3 and 6 months of savings, but likely closer to 6 if the income is lopsided,” says certified financial planner Curtis Crossland of Suttle Crossland Wealth Advisors.

In addition to an emergency fund, you may also want to have additional accounts where you save for short-term goals, like buying a home in the next 6 months, or taking a vacation in the near future. And of course, you’ll want to sock away and invest plenty of money for retirement. You may also find this guide on how much to save each month helpful. You can see some of the highest savings account rates you may get now here.

How to choose between a savings account or MMA

Experts say you should put your emergency fund money somewhere safe, like a high-yield savings account or money market account. “A high-yielding savings account is the perfect place for your emergency fund — accessible but just far enough out of reach that you’re less tempted to raid it for discretionary spending,” McBride says.

The perks of savings accounts are plentiful, but some of the biggest include flexibility, ease of saving, earning interest and knowing your money is protected. There can be drawbacks of having your money in high-yield savings accounts too, like withdrawal limits that incur fees when you’ve exceeded the number of withdrawals in a month. It’s also possible you could earn higher returns elsewhere.

Another account type to think about is a money market account (MMA); they’re savings accounts that have debiting and check-writing abilities accompanied by higher interest rates than traditional savings accounts. MMAs frequently have higher minimum balance requirements and usually have subpar interest rates compared to high-yield savings accounts, but if having the option to spend directly from a savings account is something that’s important for you, the MMA offers decent rates with the flexibility of writing checks or using a debit card attached to the account.

What to know before opening an MMA or savings account 

Before opening a savings account, make sure you have the protection of federal deposit insurance; this protection insures your money up to a maximum of $250,000. “Make sure you’re dealing directly with a regulated, federally-insured financial institution and not a third-party solution,” says McBride.

You also need to ensure you meet all the requirements (some banks for example might charge you a fee if you don’t maintain a certain balance) and that you can easily get money into and out of the account when needed. “Often, linking the account to the checking account at your current bank or credit union is an easy way to move money back and forth,” says McBride. You can see some of the highest savings account rates you may get now here.

Prior to opening a MMA, make sure you’re able to meet the minimum balance requirement and compare the interest rate with that of a traditional savings account and a high-yield savings account to make sure you’re getting the most bang for your buck.

McBride recommends reading the fine print and taking note of any balance limitations on earning a higher yield, any direct deposit or monthly transaction requirements to earn that yield and any geographic limitations or membership requirements.