Is my money safe at an online-only bank?

Yes, as long as the bank is FDIC-insured (or credit union NCUA-insured). The $250k coverage is per depositor per bank. Spread larger balances across multiple banks to extend coverage.

Should I chase the highest rate?

Within a 0.5% spread, no, the switching friction isn't worth it. For bigger gaps (1%+ above your current bank), yes. On $20,000, a 1% rate gap is $200/year for 30 minutes of paperwork.

What about money market funds?

Money market funds at Fidelity, Vanguard, Schwab routinely pay 4.5–5.0%, similar to HYSAs. Not FDIC-insured but historically equivalent risk for government money market funds. Better for brokerage cash; HYSAs better for separate emergency funds.

Answer · Saving

What is a good interest rate for a savings account?

By Yinka Olayokun Published May 12, 2026 Reviewed May 12, 2026

Direct Answer

In 2026, a good high-yield savings account pays 4.0–5.0% APY. Brick-and-mortar megabanks (Chase, BofA, Wells) typically pay 0.01–0.05%, an 80–500× gap on the same FDIC-insured deposit. Online banks (Ally, Marcus, SoFi, Discover, Capital One 360) and credit unions are where the rate lives. Below 3.5%, the account is meaningfully below market.

Why online banks pay more

Online banks have no branches, fewer employees, and lower regulatory overhead. They pass that cost saving to depositors as higher APY. FDIC insurance is identical ($250k per depositor per bank), so the deposit is just as safe.

What the rate actually tracks

High-yield savings APYs track the Federal Reserve's target federal funds rate with a small spread (usually 0.4–0.8 percentage points below). When the Fed cuts rates, HYSA yields drop within weeks. When it hikes, they rise. CDs let you lock in a rate; HYSAs reset.

Frequently Asked Questions

Is my money safe at an online-only bank?: Yes, as long as the bank is FDIC-insured (or credit union NCUA-insured). The $250k coverage is per depositor per bank. Spread larger balances across multiple banks to extend coverage.
Should I chase the highest rate?: Within a 0.5% spread, no, the switching friction isn't worth it. For bigger gaps (1%+ above your current bank), yes. On $20,000, a 1% rate gap is $200/year for 30 minutes of paperwork.
What about money market funds?: Money market funds at Fidelity, Vanguard, Schwab routinely pay 4.5–5.0%, similar to HYSAs. Not FDIC-insured but historically equivalent risk for government money market funds. Better for brokerage cash; HYSAs better for separate emergency funds.

Sources

National Rates and Rate Caps , FDIC. Verified May 1, 2026.

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