When you put money in a bank, you'll find that you earn different interest rates based on the type of deposit account you open and the institution you do business with. According to data by the Federal Deposit Insurance Corporation (FDIC), money market accounts typically earn the highest rates, followed by savings accounts and interest checking.
|Deposit Accounts||National Average Interest Rate|
Note that certificates of deposit (CDs) can come with even higher rates. However, these prevent you from withdrawing your money for the duration of the CD term, which can range from one month to several years. Withdrawing before the end of a CD's term usually triggers penalties that are measured in months of earned interest.
Average Interest Rates by Bank
In our initial overview we looked at the typical rates found at some of the largest brick-and-mortar banks. These figures represent the highest possible interest you can earn on balances under $25,000 at each bank, not including temporary promotional rates.
|Savings||Money Market||Interest Checking|
|Bank of America||0.01%||0.03%||0.01%|
|Huntington Nat'l Bank||0.25%||0.15%||0.25%|
|Wells Fargo Bank||0.03%||-||0.01%|
Average Savings Account Rates
While the average U.S. savings account rate for banks has held steady at 0.06% APY since May 2013, there's a good deal of variation among different options. The largest banks, which stick to the traditional brick-and-mortar business model, won't offer more than 0.01% APY on their standard savings accounts. At that rate, a savings balance of $10,000 would earn around ten cents a year.
Online savings accounts offer a slightly better deal, with interest rates of up to 1.05%. While that's more than a hundred times the standard savings rate at national banks, the online-only banks that offer such rates don't provide physical service locations, meaning that you won't be able to speak with a banker in person to manage your account.
Average Money Market Account Rates
The rate on money market accounts, which are discussed in depth here, tend to be somewhat higher than the rates on regular savings accounts. Banks attach better APYs to these accounts because they generally require more money to open and more money to waive the monthly maintenance fees. Many banks also encourage customers to open multiple deposit accounts by offering boosted "relationship" rates on the money market accounts.
As with standard savings, you can find online-only banks offering much better interest rates on money market accounts compared to brick-and-mortar institutions. Typically online money market rates hover around 0.80% to 0.85% for all balances, which is much better than the national average of 0.08% APY. While online-only banks don't offer boosted relationship rates for opening more accounts, they do provide the same rate for any amount you deposit, making it much easier to earn a good rate on a low money market balance.
Average Interest Checking Rates
Interest checking, sometimes called high-yield checking, doesn't usually earn more interest than a traditional savings account. Major banks only give out around 0.01% APY on most interest checking options, and the national average of 0.04% is mostly a reflection of the high interest rates of online banks and smaller regional banks whose account policies tend to be more generous to customers.
Another reason you won't find many high-interest checking options is that most people find it much easier to earn better interest with savings accounts, which tend to see few withdrawals. Checking account balances are always fluctuating due to the frequent expenses of everyday living, making it difficult to earn reliable interest. The few checking accounts that do earn interest are usually premium accounts that require large amounts of money to open or to waive the account fees charged by the bank each month.
Average CD Rates
While this article covers some general points about certificates of deposit, we've also provided a more detailed look at average CD rates here. We've chosen to treat CDs separately because their interest rates work differently from other types of deposit accounts. The longer you choose to keep money in a CD, the higher rate it earns. The table below lists the FDIC national averages for CDs under $100,000, with typical term lengths.
|CD Term Length||Average APY||Interest Earned on $10,000 Deposit|
Ideally, the only time you withdraw or manage the money in a CD comes when its predetermined term expires and you close it out. Withdrawing from a CD before its maturity date triggers penalty fees costing one-third to one-half of the maximum interest you would earn. If you withdraw before you reach those points, you can actually end up with less money than you began, so it's important to leave your CD deposit alone until it matures.