Savings account interest rates are at 15-year high, but only fewer Americans are benefiting

Savings returns are expected to be the best they have been in 15 years, in part because of the Federal Reserve's recent increase in interest rates as a result of persistent inflation.

According to Bankrate.com, top-yielding online savings account rates are currently slightly north of 5%, the highest level since 2008 and significantly higher than the 0.8% of the previous year.

With a savings account paying 4.15% interest, even Apple entered the fray.

According to Greg McBride, chief financial analyst at Bankrate, "higher returns on federally insured savings and money market accounts represent the only free lunch in finance." 

The average savings account interest at several of the biggest retail banks is currently 0.39%, down from years of near-zero rates.

Ken Tumin, the creator of DepositAccounts.com, stated that on a $10,000 balance, "that's $500 you could be earning, versus almost nothing."  

Even while savers may receive higher returns on their money, according to a Bankrate analysis, only 22% of savers are earning 3% or more on their accounts, and almost as many savers are receiving no interest at all.

The majority of respondents stated that their main reasons for staying with their current bank or preferred local branch over high-yield savings accounts. Others claimed they lacked sufficient resources to justify the transition or were concerned about the security of their money in an online institution.

Compared to 2022, 49% have smaller savings or none at all.

Overall, Americans are saving less money. According to a second February Bankrate study, 49% of individuals have less savings or none compared to a year ago.

The largest percentage ever of people—more than one-third—now owe more on their credit cards than they have in emergency funds.

Savings have suffered as a result of the high inflation rate in many households, according to McBride.

According to a DollarGeek analysis of data from the Fed's Survey of Consumer Finances, the average American's savings are 32% below where they should be when scaled against their pay.  

4.5% of families have no bank accounts at all.

And then there are some who, at least at a bank or credit union, don't save anything at all.

According to the FDIC's most recent study, 4.5% of households in 2022 had neither a checking account nor a savings account.

Lack of funds to fulfil minimum balance requirements and mistrust of banks were the most often mentioned reasons for remaining unbanked, followed by worries about account fees.

Although more households can use online payment services like PayPal and Venmo for regular transactions, McBride noted that "if you are not part of the banking system, you are not benefiting from savings rates and are probably not building credit very effectively. And those can have pretty significant ripple effects on your finances, not only now but for years to come."