The queries concerning the common interest rates linked with savings accounts.
In the ever-evolving world of banking, a shift towards higher interest rates on savings accounts is taking place. This change is primarily driven by online banks, which are offering significantly better returns compared to traditional brick-and-mortar banks.
As of late July 2025, the national average APY for high-yield savings accounts offered by online banks stands between 4% and 5%, with some of the best accounts offering up to 5.00% APY [1][3]. In stark contrast, traditional banks like U.S. Bank typically offer much lower APYs, often less than 1%, and the national average across all banks including traditional ones is around 1.71%, with the FDIC average for all savings accounts at about 0.38% [1][2][3].
The power of compounding becomes even more significant when we consider the interest earned on the interest over time. This is where online banks truly excel, as they have lower overhead costs and can afford to offer higher interest rates to attract deposits.
Traditional banks, on the other hand, pay less to attract deposits and maintain branch networks, resulting in lower APYs for their customers.
But what about relationship rates? These are practices where linking a savings account with a checking account can earn a higher yield at some banks. While relationship rates are more common for brick-and-mortar banks, U.S. Bank offers a higher APY by pairing a qualifying checking account with a Bank Smartly savings account [3]. However, even with these relationship rates, the APY earned at U.S. Bank can be significantly lower than the standard rate at online banks, depending on the amount of money kept with the bank.
If you're wondering about the minimum balance requirements for these high-yield accounts, many online banks have minimum opening requirements of $100 or less. This means that even with a modest savings, you can take advantage of the higher interest rates offered by online banks [3].
Comparing online banks with larger banks can result in finding high-yield accounts with lower minimum balances, no monthly fees, and potentially the same APY on all balances [3]. Our website surveys over 500 banks and credit unions weekly to generate the national averages [3].
In summary, if you prioritize earning the highest APY on your savings, online high-yield savings accounts offer substantially better returns (4%-5%) than traditional banks like U.S. Bank (less than 1%) at present. However, traditional banks may offer more convenience for in-person banking but with lower interest earnings [1][4]. It's essential to do your research and find the best high-yield savings account that suits your needs and financial goals.
References:
[1] Bankrate. (2025). Best High-Yield Online Savings Accounts of July 2025. [online] Available at: https://www.bankrate.com/banking/savings/best-high-yield-online-savings-accounts/
[2] FDIC. (2025). National Rates & Rate Caps. [online] Available at: https://www.fdic.gov/regulations/resources/rates/
[3] NerdWallet. (2025). Best High-Yield Online Savings Accounts of July 2025. [online] Available at: https://www.nerdwallet.com/best/banking/high-yield-savings-accounts
[4] Investopedia. (2023). Online-Only Bank. [online] Available at: https://www.investopedia.com/terms/o/online-only-bank.asp
- To maximize your earnings in personal-finance, consider opening a high-yield savings account with an online bank, as they offer significantly better finance rates compared to traditional banks, with APYs ranging from 4% to 5%.
- When making a decision about your savings accounts, it's crucial to evaluate various factors, including interest rates and minimum balance requirements. Online banks typically have lower minimum balances and no monthly fees, making them a viable option for individuals seeking high returns in personal-finance management.
