Best Savings Account Rates
By: Conor Keenan Last updated September 30, 2025
Conor Keenan, co-founder of CompareAccounts, is a notable personal finance expert with work seen in Wall Street Journal | Associated Press | Reuters | Yahoo Finance
Editorial Independence: Our opinions, reviews, and recommendations are our own. Partner commissions keep our site free, but our content remains independent.
Review the high yield savings accounts we recommend to our family and friends below. Open your new account now and start earning compound interest today.
APY
4.10%
- High-Yield Savings Account
- 4.10% APYⓘ
- Min. Opening Deposit: $500
- Min. to Earn APY: $0.01
- $0 Account Fees
- Interest Accrues Daily and is Paid Monthly
- Open an Individual or Joint Account
- FDIC Insured up to $250,000 per depositor
- U.S.-based Customer Service Available from 6 a.m. to 6 p.m. PDT Monday – Friday
- Ranked #1 Top-Performing Large Bank with Assets $50 Billion and Above in 2021, 2022, 2023, & 2024 by American Banker
- See Site for Details
Western Alliance Bank APY Disclosure
ⓘ The annual percentage yield (APY) is accurate as of September 30, 2025 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.On Western Alliance Bank's
Secure Site, Member FDIC
APY
4.10%
- High-Yield Savings Account
- 4.10% APYⓘ
- Min. Opening Deposit: $500
- Min. to Earn APY: $0.01
- $0 Account Fees
- Interest Accrues Daily and is Paid Monthly
- Open an Individual or Joint Account
- FDIC Insured up to $250,000 per depositor
- U.S.-based Customer Service Available from 6 a.m. to 6 p.m. PDT Monday – Friday
- Ranked #1 Top-Performing Large Bank with Assets $50 Billion and Above in 2021, 2022, 2023, & 2024 by American Banker
- See Site for Details
Western Alliance Bank APY Disclosure
ⓘ The annual percentage yield (APY) is accurate as of September 30, 2025 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.On Western Alliance Bank's
Secure Site, Member FDIC
APY
4.25%
Annual Percentage Yield (APY)
- Money Market Account
- Min. initial deposit: $100
- Earn up to 4.25% APY
- 4.25% APY Minimum Balance: $25,000
- Avoid maintence fees with $10,000+ avg. daily balance
- APY available for new Elite Money Market clients
- Best for branch access with 2,000+ branches nationwide
- Easy access to your money when you need it
- APY may vary by zip code
- See Site for Details
On U.S. Bank National Association's Secure Site, Member FDIC
Up to $300 Bonus
up to APY
Annual Percentage Yield (APY)
- Checking & Savings Account
- Min. to Open: $0
- Bonus: up to $300 with Direct Depositⓘ
- Up to 4.50% APY on Savings Balances with Qualifying Activities
- $0 Monthly Fees
- FDIC Insured up to $250,000
- Up to $3,000,000 of additional FDIC insurance through a network of participating banks
- Limited Time Offer:
+0.70% Boost to 4.50% APY for up to 6 Months on New Accounts with Eligible Direct Deposit. - Terms Apply
- See Site for Details
1. Up to $300 Bonus Tiered Disclosure
New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Eligible Direct Deposit can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 4.50% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
2. APY disclosures
SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 4.50% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
3. Fee Policy
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
4. Additional FDIC Insurance
SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms See list of participating banks at SoFi.com/banking/fdic/receivingbanks
5. ATM Access
We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
6. Early Access to Direct Deposit Funds
Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
7. Overdraft Coverage
Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with Eligible Direct Deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.
8. 0.70% Savings APY Boost
Earn up to 4.50% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.80% APY as of 8/5/25) for up to 6 months. Open a new SoFi Checking & Savings account with Eligible Direct Deposit by 1/31/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
On SoFi's Secure Site,
Member FDIC
Bonus Offer
APY
3.40%
- High Yield Savings Account
- Min. balance for APY: $0
- Min. Initial Deposit: $0
- Monthly Fees: $0
- 3.40% APY
- Insured up to $250,000
- Open Your First Discover Online Savings Account & Earn up to a $200 Bonus
- Deposit at least $15,000 to Earn a $150 Bonus
- Deposit at least $25,000 to Earn a $200 Bonus
- Open Account By 3/12/2026
- Deposit Funds within 45 Days of Account Open Date
- Terms Applyⓘ
- Use Promo Code: CA925
- See Site For Details
Disclosure for promo code CA925:
To qualify for Bonus: Apply for your first Discover Online Savings Account, enter Offer Code CA925 at application, deposit into your Account a total of at least $15,000 to earn a $150 Bonus or deposit a total of at least $25,000 to earn a $200 Bonus. Qualifying deposit(s) may consist of multiple deposits and must post to Account within 45 days of account open date. Maximum bonus eligibility is $200.
What to know: Offer not valid for existing or prior Discover savings customers. Eligibility is based on primary account owner. Account must be open when bonus is credited. Bonus will be credited to the account within 60 days of qualifying for the bonus. Bonus is subject to tax reporting. Offer ends 03/12/2026, 11:59 PM ET. Offer may be modified or withdrawn without notice. Due to new customer funding limits, you may wish to initiate fund transfers at your other institution. For information on funding, see FAQs on Discover.com/Bank.
On Discover Bank's Secure Site, Member FDIC
Compare With
APY
0.01%
Chase Bank Details
- Savings Account
- 0.01% APY
- Min. Balance to Avoid Service Fee: $300
- Monthly Service Fees: up to $5
- Limit 6 Withdrawals per Monthly Statement Period
- Withdrawal Overage Fees: up to $15 per month
- Other Miscellaneous Fees Apply
Not Recommended.
Shown For Comparison Purposes Only.
APY
3.85%
- High Yield Savings Account
- Balance for APY: $5,000
- 3.85% APY
- No Monthly Service Fees
- Earn up to a $300 Bonus
- Earn a $225 Bonus. Deposit $25,000 - $49,999.99
- Earn a $300 Bonus by Depositing $50,000+
- Deposit Funds within 30 Days of Account Open Date
- Terms Applyⓘ
- Use Promo Code: PS2025
- Insured up to $250,000
- Sign Up in Under 5 Minutes
- See Site for Details
Platinum Savings Promotion PS2025
Platinum Savings Promotion – PS2025
This limited time offer to qualify for a $225 cash bonus with a minimum deposit of $25,000
or a $300 bonus with a minimum deposit of $50,000 is available to New and Existing
Customers who meet the Platinum Savings promotion criteria. The Promotion begins on
September 23, 2025, and can end at any time without notice.
Customers will receive a $225 or a $300 bonus provided that the program requirements are
met:
New CIT Bank Customers: Offer valid for a New CIT Bank Customer, who, at account
opening, does not have a valid CIT Bank User ID (a “New Customer”), or any open CIT Bank
accounts provided that the following requirements are met:
Offer Requirements
1. New customers must open a Platinum Savings account with a valid Promo Code,
“PS2025.” The Platinum Savings account Bonus Promo Code will appear on the
online account opening enrollment web page. The Promo Code must be used at the
time of account opening. Accounts opened during the program period without the
Promo Code are ineligible to receive the bonus.
2. New customers must deposit at least $25,000 for a $225 bonus, or at least a
minimum of $50,000 for a $300 bonus into the enrolled Platinum Savings account
within the first 30 calendar days following account opening (the “Funding Period”).
The single or multiple deposit(s) of $25,000 or $50,000 or more used to fund the
account must come from a funding source outside of CIT Bank. Transfers from
existing CIT Bank accounts will not qualify. Funds already on deposit with CIT Bank
are ineligible.
3. The enrolled Platinum Savings account must be open at the time of the bonus
payment to qualify.
CIT Bank Customers Prior to the Promotion: Offer valid for a Primary account owner of an
existing or newly opened Platinum Savings account with a CIT Bank User ID before the start
of the promotion, provided that the following requirements are met:
Offer Requirements
1. Current customers with a Platinum Savings account opened prior to the promotion
may enroll their current Platinum Savings account into the promotion using Promo
Code PS2025 or open a new Platinum Savings account via the enrollment web page
using Promo Code PS2025. After opening or enrolling the account deposit at least
$25,000 for a $225 bonus, or at least a minimum of $50,000 for a $300 bonus into
their enrolled Platinum Savings account within 30 calendar days (the “Funding
Period”) from the date they enrolled or opened the account. All funds deposited to
qualify for the bonus must be new funds from a source outside CIT Bank. Funds
already on deposit with CIT Bank are ineligible.
2. Customers without a Platinum Savings account open prior to the Promotion must
open a new Platinum Savings account with a valid Promo Code PS2025 which
appears on the enrollment web page for the Platinum Savings Account Bonus
Promotion and deposit at least $25,000 for a $225 bonus, or at least a minimum of
$50,000 for a $300 bonus into the account within the first 30 calendar days
following account opening (the “Funding Period”). All funds deposited to qualify for
bonus eligibility must be new funds from a source outside of CIT Bank. Funds
already on deposit with CIT Bank are ineligible.
3. Customers who are not the Primary account owner on a Platinum Savings account
may be eligible to earn a $225 or $300 bonus by opening a new Platinum Savings
account as a Primary account owner with a valid Promo Code PS2025 which
appears on the enrollment web page for the Platinum Savings Account Bonus
Promotion, and depositing at least $25,000 for a $225 bonus, or at least a minimum
of $50,000 for a $300 bonus to the account within the first 30 calendar days
following account opening (the “Funding Period”). The minimum $25,000 or $50,000
used to fund the account must come from a funding source outside of CIT Bank.
Funds already on deposit with CIT Bank are ineligible. Transfers from existing CIT
Bank accounts will not qualify.
4. CIT Bank will deposit the qualifying bonus into the customer’s enrolled account
within 60- days following the 30-day funding period.
5. The enrolled Platinum Savings account must be open at the time of the bonus
payment to qualify.
There is a limit of one Platinum Savings promotional offer per account and per Primary
customer. If multiple Platinum Savings accounts are opened, only one account per primary
account owner is eligible.
Custodial accounts and Trust Accounts are not eligible.
This offer is non-transferable.
IMPORTANT: All customers who qualify for the $225 or $300 bonus offer will receive the
bonus in the enrolled Platinum Savings account within 60 days after the 30-day funding
period.
Example and key dates for the Platinum Savings promotion
Below is an illustration of the promotion requirements and key dates. Individual results
may vary based on the date of account opening.
A customer who opens a Platinum Savings account with the promotional code, “PS2025,”
on September 23, 2025, funds it with a minimum of $25,000 or $50,000 by October 8, 2025, and satisfies the additional requirements specified above can expect to receive the
qualifying bonus no later than December 7, 2025. Below are the key dates and deadlines in
this example:
9/23/2025: The Platinum Savings account is opened by a customer who uses promotion code PS2025.
9/23/2025 – 10/8/2025: The account is fully funded with a minimum of $25,000 or $50,000 via deposit(s) from an external account(s) This represents the 30-day Funding Period.
12/7/2025: The qualified account will be credited the $225 or $300 bonus payment by this
date which is 60 days after the end of the funding period. The value of the $225 or $300 bonus will be reported as interest income on IRS Form 1099-INT for the calendar year in which it was paid. The recipient is responsible for any applicable taxes.
Platinum Savings interest rates are variable and may change without notice, including after
the account is opened.
On CIT Bank's Secure Site, Member FDIC
APY
3.66%
- High Yield Savings Account
- Min. initial deposit: $1
- 3.66% APY
- FDIC Insured up to $250,000
- No Monthly Fees
- Interest Compounded Daily
- RBMAX is Republic Bank's Digital Banking Service
- Founded in 1982, Republic Bank Now Has Over $6 Billion in Assets
- Exclusive High APY Offer Powered by The Raisin Platform
- See Site for Details
On Raisin's Secure Site for
RBMAX, FDIC Insured
Compare With
APY
0.01%
Wells Fargo Details
- Savings Account
- Min. Initial Deposit: $25
- No Fee Min. Balance: $300
- 0.01% APY
- Monthly Maintenance Fee of $5. If Below Min. Balance
- Other Fees May Still Apply
Not Recommended.
Shown For Comparison Purposes Only.
APY
3.75%
- High Yield Savings Account
- Min. opening deposit: $100
- 3.75% APY
- No Monthly Service Fees
- No Minimum Monthly Balances
- Mobile App Online Banking
- Deposit Checks Remotely & Make Transfers Easily
- FDIC Insured up to $250,000
- Sign Up in Under 5 Minutes
- Terms Applyⓘ
- See Site for Details
Savings Connect Account Disclosure
APY — Annual Percentage Yield is accurate as of September 23, 2025. Interest Rates for the Savings Connect Account are variable and may change at any time without notice. The minimum to open a Savings Connect account is $100. Fees could reduce earnings on the account.
- For complete list of account details and fees, see our Personal Account disclosures. please visit: https://cit-fcb-t.cit.com/cit-
bank/resources/forms
On CIT Bank's Secure Site, Member FDIC
Compare With
APY
0.01%
Bank of America® Details
- Savings Account
- No Fee Min. Balance: $500
- 0.01% APY
- Monlthy Maintence Fee of $8. If Below Min. Balance
- $5 Fee for Statement Copies
- Other Fees May Still Apply
Not Recommended.
Shown For Comparison Purposes Only.
To recap our recommendations.
Best Savings Accounts According To CompareAccounts™
U.S. Bank® Money Market Account: up to 4.25% APY
SoFi® Checking and Savings: 4.50% APY & Earn up to $300 with qualifying activities
Discover® Bank Online Savings Account: 3.40% APY - Earn up to $200 with Promo Code: CA925
CIT Bank® Platinum High Yield Savings Account: 3.85% APY - Earn up to $300 with Promo Code: PS2025
RBMAX High Yield Savings Account: 3.66% APY
CIT Bank® Savings Connect Account: 3.75% APY as of September 30, 2025
Customers Also Viewed: High-Yield Certificate of Deposit Accounts
Best For: Shorter Term + High APY From a Top Bank
Term: 3 Months
Limited Time Offer: New customers can earn a $75 bonus for $10K, $250 bonus for $25K, $500 bonus for $50K deposited or $1,000 bonus for $100K deposited or more. Use promo code EASY at sign-up.
Western Alliance Bank offers 3.75% APY exclusively through the Raisin Platform on their 3 month CD.
Interest compounds daily and is posted to your account monthly.
This CD is a great fit if you're looking for a high APY but want access to your money sooner than other CD terms.
In addition to this high APY, Western Alliance offers $0 monthly maintenance fees and is insured by the FDIC for up to $250,000 per depositor.
The Raisin platform also offers you the opportunity to access up to $10 million in federal deposit insurance through its network, all from a single secure login.
Customer service is located in New York, they are available via phone or email. You'll also have 24/7 access to your account and funds.
Western Alliance Bank was founded in 1994 and is consistenly ranked among the top banks. They were ranked #1 top-performing large bank with assets greater than $50 billion in 2021 by both American Banker and Bank Director. Serving clients across the country wherever business happens.
See Raisin's Secure Site for Western Alliance Bank to Get More Details.
4.00% APY
Annual Percentage Yield (APY)
On U.S. Bank National Association's
Secure Site, Member FDIC
Best For: Shorter Term + Branch Access
Term: 5 Months
Now, get a higher rate of return by locking in an exclusive rate on balances up to $250,000.
U.S. Bank offers 4.00% APY on their 5 month CD with no monthly fees and $1,000 initial deposit.
Exclusive rate on balances up to $250,000.
U.S. Bank has over 2,000 branch locations in more than half of U.S. states.
Deposits are insured through the FDIC for up to $250,000 per depositor and if you have any questions U.S. Bank offers "24-Hour Banking" meaning a customer service representative is available 24/7.
Rates vary by term and location. Lock in your 5 Month CD rate today & start earning guaranteed interest now.
See U.S. Bank's Secure Site For More Details.
3.50% APY
On Discover Bank's Secure Site,
Member FDIC
Best For: Online Banking Experience + Customer Service
Term: 6 Months
APY: 3.50%
Discover Bank offers 3.50% APY with no monthly fees and no minimum deposit required to open an account on their 6 Month CD.
Discover Bank is one of the first online focused banks to offer no monthly fees and what they call "No. Fees. Period."
Deposits are insured through the FDIC for up to $250,000 per depositor and if you have any questions Discover offers 100% U.S.-based Customer Service Available 24/7.
Interest compounds daily on this offer so lock in your 6 Month CD rate today & start earning guaranteed interest now.
See Discover Bank's Secure Site For More Details.
Frequently Asked Questions About Savings Accounts
What is a Savings Account?
A savings account is a type of bank account that offers a higher Annual Percentage Yield (APY) than a checking account.
A checking account is used for money that needs to be moved quickly such as to pay bills or use for ever day spending.
Whereas a savings account is a better option for money that doesn’t need to be used right away, for example your emergency fund.
How to Find The Best Savings Account?
Arguably the best way to find the best savings accounts is right here on www.compareaccounts.com. Although we don’t showcase every single savings account available, we stand by our recommendations as the highest tier of the best accounts in America.
Why are Online Savings Accounts Better Than Traditional Ones?
Traditional banks offer low rates on savings accounts. This is because they’re managing insanely large amounts of money and need to manage their risk profile. The less “guaranteed returns” they provide, the less risky their overall portfolio becomes. As a result, traditional banks only offer about .01-.10% interest on their savings accounts. A high yield account offers up to 3.65% interest on your savings. Which is nearly 10x the national average. Now you know why so many people are switching to a high yield savings account.
Is My Money Safe?
Yes! Savings accounts listed on this page are protected by the Federal Deposit Insurance Corporation (FDIC). The Federal Deposit Insurance Corporation insures Bank and thrift deposits up to $250,000.
How Do I Open a Savings Account?
Easy. Simply click on the “view details” button above of your selected finanicial instution. Once you arrive at our partners site, you’ll be able to open your new savings account safely and securely.
What Determines Savings Account Interest Rates?
Savings account interest rates are typically determined by a variety of factors, including the supply and demand for funds in the financial system, the overall level of interest rates in the economy, and the policies of the financial institution that is offering the savings account. In general, savings account interest rates tend to be lower than rates on other types of financial products, such as loans, because they involve a lower level of risk for the lender. However, the specific interest rate that a financial institution offers on a savings account can vary based on a number of factors, such as the type of account, the balance of the account, and the length of time the funds are deposited.
One other factor that can affect savings account interest rates is the level of competition among financial institutions. In a market with many banks and credit unions offering savings accounts, the institutions may need to offer higher interest rates in order to attract customers. On the other hand, in a market with fewer options for savings accounts, financial institutions may be able to offer lower interest rates and still attract depositors. Additionally, some financial institutions may offer higher interest rates on certain types of accounts, such as online-only accounts or accounts with higher minimum balance requirements, in order to differentiate their products and attract certain types of customers.
What is the Lowest Interest Rate Available?
The lowest interest rate on a savings account can vary depending on the financial institution and the specific terms of the account. Some financial institutions may offer very low interest rates on their savings accounts, like some of the banks above who only offer 0.01% APY.
Although interest rate is one of the most important factors, other factors, such as fees, minimum balance requirements, and the convenience of the institution’s locations and services, may also be important to consider. It may be a good idea to shop around on www.compareaccounts.com and compare the terms and conditions of different savings accounts in order to find the one that best meets your needs.
What is the Federal Reserves Role in Setting Interest Rates?
The Federal Reserve, or the “Fed,” is the central bank of the United States and is responsible for implementing monetary policy in the country. One of the main tools the Fed uses to influence monetary policy is setting the target range for the federal funds rate, which is the interest rate at which banks lend money to each other overnight. The Fed uses this tool to help achieve its goals of maximum employment, stable prices, and moderate long-term interest rates.
The Fed adjusts the federal funds rate by buying and selling securities, such as government bonds, in the open market. When the Fed wants to increase the federal funds rate, it will sell securities and take money out of circulation, which reduces the supply of funds available for lending and pushes up interest rates. Conversely, when the Fed wants to lower the federal funds rate, it will buy securities and add money to circulation, which increases the supply of funds available for lending and pushes down interest rates.
The federal funds rate is a benchmark for many other interest rates in the economy, including the prime rate, which is the rate at which banks lend to their most creditworthy customers. As a result, changes in the federal funds rate can affect the interest rates that individuals and businesses pay on loans, as well as the returns they earn on investments such as savings accounts and certificates of deposit.
One thing to note is that the Federal Reserve’s ability to influence interest rates is not unlimited. If the Fed tries to set the federal funds rate at a level that is significantly higher or lower than the level that the market would dictate based on supply and demand, it could lead to distortions in the financial system and disrupt the normal functioning of credit markets. Therefore, the Fed typically seeks to align its target for the federal funds rate with the “neutral” rate, which is the level of the federal funds rate that is consistent with sustainable economic growth and low and stable inflation over the long run.
It is also worth noting that the Federal Reserve’s ability to set the federal funds rate is not the only factor that determines interest rates in the economy. Other factors, such as the level of risk associated with a particular type of loan or the level of competition among lenders, can also affect the interest rates that are offered to borrowers. Additionally, the Federal Reserve’s monetary policy decisions can be influenced by a variety of economic and financial conditions, both within the United States and around the world.
*National Savings Rate Average as published by FDIC