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If you haven’t switched your savings account recently, now may be the time

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On Wednesday, the Federal Reserve raised interest rates again — which is good news for savers. What’s more, savers have been seeing yields on savings accounts rise for months now. “The top-yielding, nationally available savings accounts are paying above 4%, and banks are still very much in the mode of increasing their payouts. 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” says Greg McBride, chief financial analyst at Bankrate.  (You can see the highest savings account rates you may get now here.)

In fact, Americans haven’t seen yields like this on some high-yield savings accounts in nearly 15 years. “With interest rates rising, the most competitive savings accounts offer yields last seen in 2009 and they continue to climb,” says McBride.

That said, the average savings account is still paying a lousy yield (see below), so getting in on these higher rates may require consumers to switch banks. “We haven’t seen the peak in savings account yields. There will continue to be upward momentum with the Fed’s rate hikes ongoing,” says McBride.

Today’s savings rates

Below are the latest average rates on savings accounts, according to data from Bankrate released on February 1, 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. 


Average rate paid

Money Market Account


Savings $10K


Savings $25K


Savings $50K


Higher Yielding Savings Accounts


How much money should you have saved?

There’s no magic number, but pros generally recommend keeping 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. “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,” says McBride. (You can see the highest savings account rates you may get now here.)

Indeed, couples with two earners might need less than a single person, 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.

Meanwhile, those in a job field prone to layoffs, or someone looking to switch careers soon, might need up to 12 months. What’s more, 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.

Savings accounts vs. money market accounts

Experts agree that you should put your emergency fund money somewhere safe, like a high-yield savings account or money market account. (You can see the highest savings account rates you may get now here.)

The perks of savings accounts are plentiful, but the biggest include flexibility, ease of saving, earning interest and knowing your money is protected. There can, however, be drawbacks of having your money in high-yield savings accounts, like withdrawal limits that incur fees when you’ve exceeded the number of withdrawals in a month. In the long run, these accounts aren’t ideal because they don’t pay as much interest as other savings vehicles. 

Another account-type to consider is a money market account (MMAs); 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, a MMA offers decent rates with the flexibility of writing checks or using a debit card attached to the account.

What to know before opening a savings account or MMA

Firstly, you’ll want to look for an account with the protection of federal deposit insurance. “Make sure you’re dealing directly with a regulated, federally-insured financial institution and not a third-party solution,” says McBride.

Consider the interest rate of the account, as well as the rules that come with the account, such as any balance requirements you must meet to avoid fees. Consider, too, how easy it is to 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 the highest savings account rates you may get now here.)

McBride also 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.

The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.


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