Should I Shop for Savings Accounts That Earn 3% APY?

After recent rate increases made by the Federal Reserve, some savings accounts are paying more than 3% annual percentage yield, or APY. This rate is among the highest you can find for a savings account right now, and it’s worth shopping around for one.

Here’s what to know about why rates are increasing and how your money can earn some of the best yields around.

Is 3% a high rate?

In a word, yes. The national average savings rate as of October 2022 is 0.21% APY, according to the Federal Deposit Insurance Corp. That’s a good deal higher than in the past — it was a paltry 0.06% in January 2022. But high-yield accounts typically earn many times more than that average, with the best high-interest accounts topping 3% right now.

What does this difference mean for you? Let’s say you put $5,000 in a savings account that earns 0.21% APY. It’ll grow by only about $11 after a year. But put those funds in a high-yield savings account that earns 3%, and your bank balance will increase by…

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This article was written by Margarette Burnette and originally published on www.nerdwallet.com