In the past, increased interest rates have typically resulted in greater profits for consumers who would save money in their accounts. Financial institutions strive to entice individuals who are willing to save by offering competitive rates.
In an attempt to cool inflation, the Federal Reserve has increased interest rates to their highest level in almost two decades. The rationale behind this is to make investing, hiring and borrowing more expensive and bring down the economic demand that boosts price growth as a result.
As a customer, you cannot expect to receive high returns on your saving at your local bank branch as they do not offer high annual percentage yields or APYs. According to Bankrate, the APY is just 0.24% for a basic savings account.
Bankrate's senior vice president and chief financial analyst, Greg McBride, states that online banks often offer the most lucrative savings account options, despite being less recognizable than larger traditional banks. Nevertheless, these online banks are still under the regulation and protection of the FDIC.
At present, CIT Bank, a subsidiary of First Citizens Bank headquartered in North Carolina, offers the highest-yielding savings account on the market, with an annual interest rate of 4.75%, as reported by Bankrate. This account does not have any minimum balance requirements or monthly service charges.
Although CIT Bank may not be a well-known bank, two well-established companies have collaborated to cater to the demand for high-interest savings accounts. Recently, Apple and Marcus, which is Goldman Sachs' consumer division, introduced a savings account with a 4.15% interest rate, which can be opened directly from the Wallet app on users' iPhones, with no minimum deposit or balance requirements.
Bankrate's McBride said that all consumers should have emergency funds and that the current market for high-yield savings accounts creates a great opportunity to park your money and watch it grow over time to pad out such a fund.
