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- High-yield savings account rates are going up as the Federal Reserve raises its rate.
- Some banks are raising their rates more drastically than others.
- Switching to another bank may or may not be worth the effort; try asking your bank for a rate increase first.
Many high-yield savings account rates have gone up drastically over the last year. As the Federal Reserve has raised its rates several times throughout 2022 and early 2023, high-yield savings account rates have also gone up.
Some banks have raised rates drastically. Others are increasing rates gradually, so you may see higher APYs elsewhere.
If your rate hasn't increased as much as rates at other banks, should you switch high-yield savings accounts? Here are a few things to consider when making your decision.
1. Review current savings rates
First, you'll want to look at current savings rates to see how your account stacks up to the most competitive savings accounts available. For example, UFB Direct and CIT Bank have some of the highest savings rates right now. Our best high-yield savings accounts guide is also a great place to start. You can also use our compound interest calculator to figure out how much you'll earn with a particular interest rate.
It's important to remember that high-yield savings accounts have variable interest rates. This means that the rate could change at any time. While you might find a bank with a competitive interest rate, the rates may drop later.
It may be better to keep your current account if there's only a small difference in interest between your savings account and the most competitive option. Switching bank accounts likely won't make much of an impact.
2. Before you switch, ask your bank for a rate increase
Is your bank raising rates more slowly than other institutions? Maggie Gomez, CFP professional and owner of Money with Maggie, says you should first ask your bank for an increase in the current rate.
Gomez explains that some financial institutions won't offer a higher rate unless consumers get proactive. "Later, to be more competitive, they'll increase their rates more publicly — but I think it'll be really slow," Gomez says.
3. Switching accounts may or may not be worth the effort
Setting up a high-yield savings account may also require some time and effort. Think about the steps involved in moving to a new high-yield savings account:
- Research and select which bank to use
- Open a new high-yield savings account with a different institution
- Wait to be approved for a new account
- Set up external transfers from any other bank account you may have
- Transfer money from your old high-yield savings account to your new one
- Wait for funds to transfer
- Possibly close your old high-yield savings account
You may decide this time and effort is worth the extra money you'll earn in interest, especially if your account holds a lot of money and the savings rates at other banks are significantly higher. However, it might not be worth the annoyance, especially if your new account's rate drops afterward.
4. If you're already unhappy with your account, now could be the time to switch
If you're not satisfied with your current bank — maybe you don't like customer service or there are high fees — it may be time to break up with your high-yield savings account and find one that will make you happier.
There are many high-yield savings accounts with zero monthly maintenance fees. You can also find banks with 24/7 customer support if traditional banking hours don't fit your schedule.
When selecting a high-yield savings account, you'll want to consider many factors, like minimum balance requirements, monthly service fees, and the current interest rate. By figuring out your preferences, you can choose the best high-yield savings account for your needs and goals.