Savings Account Interest Rates At Big Banks

Find out why big banks are notorious for paying low rates on savings accounts and where you can get much better rates.
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The national average savings interest rate is 0.36%, according to the FDIC. That's a meager $36 for an annual $10,000 savings deposit.

Big banks pay even less interest on savings accounts.

If you're looking to earn more on your savings, it may be worth considering online banks, credit unions, regional and local banks. 

These financial institutions often offer higher interest rates than big banks, which can help offset the effects of inflation on your savings.

While it may require some effort to research and compare rates, the potential returns through your saving money efforts could be significant in the long term.

Savings Rates at the Five Largest Banks in the United States

As of 2024, the five largest banks in the United States by total assets are:

1. JPMorgan Chase

JPMorgan Chase & Co.: Total assets of $3.8 trillion

  • Chase Savings℠ Interest Rates – 0.01% APY on All Balances

2. Bank of America

Bank of America Corp.: Total assets of $3.1 trillion 

  • Standard Tier – 0.01%
  • Gold Tier – 0.02%
  • Platinum Tier – 0.03%
  • Platinum Honors Tier – 0.04%
  • Diamond Tier – 0.04%
  • Diamond Honors Tier – 0.04%

3. Wells Fargo

Wells Fargo & Co.: Total assets of $1.9 trillion

  • $0 – $99,999.99: 0.25%
  • $100,000 – $499,999.99: 1.00%
  • $500,000 – $999,999.99: 1.98%
  • $1,000,000 or more: 2.47%

4. Citibank

Citigroup Inc.: Total assets of $2.3 trillion

  • Citi Access Account – 0.05%
  • Citi Priority Account – 0.10%
  • Citigold Account – 0.12%
  • Citibank’s Accelerate – 3.85%

5. U.S. Bank

U.S. Bancorp: Total assets of $663 billion

  • U.S. Bank Saving Interest Rates – 0.01% APY on All Balances

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4.60%

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SoFi Bank is an online-only bank that offers a combined savings/checking account with competitive yields when you set up direct deposit. Without direct deposit you'll earn 1.20% APY.

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4.50%

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The Upgrade Premier Savings account earns 5.21% APY, but you need a balance of at least $1,000. You'll earn 0% on days your balance dips below the threshold.

Why the largest U.S. Banks pay such low rates on savings accounts

Low rates on savings accounts offered by the largest United States banks are influenced by a variety of factors, including profitability, market competition, Federal Reserve policy, and risk management.

Let's break it down further:

Profitability. Banks make money by taking in deposits and then lending that money out at a higher interest rate. However, in a low-interest rate environment, the difference between what banks can earn on loans and what they pay out on deposits (i.e., the net interest margin) is narrower. This can reduce the profitability of banks, which can make them hesitant to raise rates on savings accounts.

Market competition. While online banks and smaller banks may offer higher rates on savings accounts to attract customers, the largest banks have less incentive to do so because they already have a large customer base. Additionally, these larger banks may have other products or services that customers value more than high interest rates on savings accounts.

Federal Reserve policy. The Federal Reserve sets the target federal funds rate, which is the interest rate that banks charge each other for overnight loans. This rate influences other short-term interest rates, including the rates that banks offer on savings accounts. In recent years, the Federal Reserve has kept interest rates low to stimulate economic growth and keep inflation in check.

Risk management. Banks need to balance the risk and return of their deposits and loans. While savings accounts are generally low-risk products, the low rates they offer help ensure that the bank can cover its costs and manage risks associated with deposit-taking and lending.

How online banks can offer better deals

Online banks can offer higher savings interest rates than traditional brick-and-mortar banks for several reasons:

Lower overhead costs. Online banks do not have to maintain a physical branch network like traditional banks, which means they have lower overhead costs. These savings can be passed on to customers in the form of higher interest rates.

No physical infrastructure costs. Because online banks don't have physical branches, they don't need to spend money on things like rent, utilities, and other expenses associated with maintaining a physical location.

Larger customer base. Online banks can serve customers across the entire country, rather than being limited to a specific geographic region like traditional banks. This allows them to attract a larger customer base and generate more revenue, which can be used to offer higher interest rates.

Competitive pressure. Online banks are often competing with other online banks, rather than just traditional banks in their local market. This creates a more competitive environment, which can drive up interest rates.

Different business model. Some online banks are set up as digital-only banks and have a different business model than traditional banks. For example, some online banks may focus solely on savings accounts and other high-yield products, which allows them to offer higher interest rates.

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