How to get more money out of a savings account while interest rates are high

As part of its plan to cool inflation, the Federal Reserve has raised interest rates to their highest levels in nearly two decades.

The idea is to make borrowing, investing and hiring more expensive, thereby cooling the demand in the economy that fuels price growth.

Historically, higher interest rates have translated into higher returns on savings accounts for consumers. Banks look to compete with one another by attracting people who are ready to put some money away.

But if you’re looking for a big return on your savings, you likely won’t find it with a basic savings account at your local branch; they are not offering much in the way of high annual percentage yields. The average APY for a basic savings account is just 0.24%, according to Bankrate.

Instead, the highest-yield accounts can usually be found at online banks, Bankrate says. While they may not look as familiar as some of the larger banks, they are still regulated and insured by the FDIC, according to Bankrate senior vice president and chief financial analyst Greg McBride.

‘Banks with a lot of deposits don’t need to pay to bring in more,’ McBride said. ‘As a consumer, you can benefit by sending money to places that are welcoming you with open arms’ by offering higher-yielding products.

As of this writing, the highest-yield savings account on the market according to Bankrate is being offered by CIT Bank, which is a division of North Carolina-based First Citizens Bank. CIT’s high-interest savings account currently yields 4.75% a year, with no minimum balance requirement and no monthly service charge.

While CIT Bank may not be a household name, two familiar brands have teamed up to take advantage of demand for high-yield accounts. On Monday, Apple and Marcus, Goldman Sachs’ consumer division, announced a savings account with a 4.15% interest rate. It requires no minimum deposit or balance, and users can set up an account from the Wallet app on their iPhones.

Locking in a guaranteed return on your savings

Even though interest rates are high right now, they won’t stay that way indefinitely. Again — that’s good news if you’re carrying debt, but bad news if you’re trying to grow your savings.

Many certificate of deposit, or CD, products offer even higher interest rates in exchange for holding your money in an account for a fixed period of time, at a fixed rate. The highest-yielding product is a two-year CD currently being offered by Bread, another online bank, which offers a 5.10% rate, according to Bankrate.

Of course, APYs come with a caveat: They can change in response to rising or falling interest rates.

Still, 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.

High APY products, he said, ‘are within reach of everyone.’