Following its September 20 to 21 meeting, in the third consecutive three-quarter point rate hike this year, the Federal Reserve raised interest rates by 0.75%. The hike is an effort to help keep the soaring inflation down; however, its effects in the financial sector are certainly felt. Many will be in search of the best interest rates for their money.
We focus on those financial institutions that have low fees and great rates, and are typically available anywhere in the U.S. You can find local banks and credit unions that offer comparable rates, but their availability is limited geographically.
Best Interest Rates for October 2022
September 2022 Interest Rates Update: There were a few rate changes over the past month.
- Chime®’s High Yield Savings Account is at 2.00% Annual Percentage Yield (APY) - approximately x8 the national average! (No minimum and no monthly fees.)
- Betterment Cash Reserve account is at 2.25% APY (Annual percentage yield (variable) is as of 09/26/2022. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.)
- Marcus by Goldman Sachs High-Yield Online Savings Account is at 2.15% APY
- LendingClub Bank High Yield Savings Account is at 2.65% APY (No minimum balance requirement after $100 to open)
- CFG Bank’s High Yield Money Market Account is at 2.75% APY ($1k minimum deposit and $1k+ minimum daily balance)
- Fitness Bank is offering a 2.50% APY savings account rate for balances over $100 when step requirements are met
- Vio Banks 2.80% APY on its Cornerstone Money Market Savings Account
These represent some of the highest rates on a nationally available savings account.
Betterment Cash Reserve APY Disclosure - Annual percentage yield (variable) is as of 9/26/2022. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
The rates on certificates of deposit vary based on the term. The longer the term, the higher the rate. Keep in mind that penalties may apply if you close the CD before the end of the term.
- CIT is offering an 11-month No-Penalty CD at 4.90% APY with a $1k minimum deposit.
- Marcus by Goldman Sachs is offering a 6-month CD at 2.00% APY, CD terms from 9 months at 2.10%, 12 months to 18 months at 3.00% APY, 2 years at 3.10% APY, 3 years at 3.15% APY, 4 years at 3.20% APY, and CD terms for 5 and 6 years at 3.30% APY, all with a $500 minimum balance.
Most checking accounts don’t pay interest. For online banks, however, you’ll find plenty of options where you can earn some interest on your funds. There are two things to keep in mind.
- Many banks offer higher interest rates only if you keep a lot of money in your checking account.
- The rates are lower than a savings account or CD.
Some top-paying checking accounts that we like include:
- FNBO Direct, which currently pays 0.15% APY.
- For those with at least $15,000 in checking, you can earn 0.25% APY from Ally Bank.
I list Ally second because most people don’t keep that much cash in checking, but it’s an option for those who do. These rates are unchanged from previous months.
Bonus: I also keep a running list of popular checking account promotions you can check out.
The longest 0% introductory period stands at 20 billing cycles on purchases and balance transfers. You can find a current list of the best 0% credit card offers here.
Note that the above rates were as of September 2022. Rates are subject to change, so please confirm the rates directly with the financial institution.
How To Get the Best Interest Rates
Usually, the easiest way to get the best interest rates is to have good or great credit. If you’re getting a credit card, for example, it’s one of the primary determining factors in your interest rate. If your credit is less than great, you can work on improving your rating.
Another factor is your current debt level. If you have a lot of debt, you may not be given preferred interest rates on things like credit cards since you’re considered a higher risk. Higher debt levels also negatively impact your credit, so it’s best to try and pay your debt off as quickly as possible to get the best rates.
Finally, how much money you have to “put down” can make a difference. In the case of a mortgage, having a sizable down payment (of at least 20%) can help to ensure you get the best rates possible. And with some CDs or high-yield savings accounts, having more money to put into those can typically get you a better interest rate.
How Do Interest Rates Work?
Interest rates are determined, at least in part, by the federal funds rate as set by the Federal Reserve. The federal funds rate is the rate banks charge each other for lending money overnight. Most recently, as mentioned before, the Fed raised its interest rate in September, with it being between 3% to 3.25%.
As this rate goes up or down, so do the rates you’re charged for borrowing money and the rates you get for loaning or depositing money. So, when the economy is strong, the Fed will tend to raise the federal funds rate. Because of that, banks can usually offer a higher interest rate on things like CDs and savings accounts.
Things To Consider When Choosing an Interest-Bearing Account
The main thing you must consider when choosing an interest-bearing account is that your rate may fluctuate depending on the product. When you choose a CD, for example, your rate is locked for that period of time.
That’s why it makes a lot of sense to lock in a good CD rate when you can find one. Alternatively, it might make sense to find somewhere else to put your money when CD rates are low since your money will be locked into that rate.
With things like a high-yield savings account, it’s good to be mindful of rates fluctuating. For instance, prior to COVID-19, rates were generally pretty high. Then suddenly, they started dropping like flies, and what was once a good APY on a savings account suddenly became almost nothing.
That’s to be expected. Rates will fluctuate with savings accounts, so be prepared for that if and when it happens.
Are There Any Risks?
There aren’t many risks to interest rates, except that you might miss out on better ones. For example, if you lock in a new rate on a mortgage, you might miss out if rates drop even further. Or, if you lock in your money with a CD, you might miss out on rates going upward.
I think the risks are minimal unless, of course, there were a major upward swing in interest rates on something like a mortgage. If you have an adjustable-rate mortgage (ARM), you’d be subject to whatever the new rates were, which will impact your payment.
Overall, the best thing to do is keep a pulse on the economy and how the federal funds rate is trending. I also find it useful to listen to the meeting minutes and any significant quotes that come out of the Fed meetings. This way, you can get a sense of how they’re feeling about the economy.
Where can I earn the most interest on my money?
Where you can earn the most interest on your money tends to fluctuate based on current economic rates. In most cases, the best non-investment option will be a high-yield savings account. You can also put money into a CD and do a CD ladder, which is when you stack several CDs on top of one another with varying maturity dates. This gives you a more constant flow of high interest.
Where should I put my savings in 2022?
Since interest rates still aren’t great right now, your best bet in 2022 is to put your savings in a high-yield savings account. It gives you some interest, but also the flexibility to move money in and out (and into other savings vehicles) as needed.
Finding the best interest rates is a combination between timing, good credit, and having money available. You can’t control the first one, but the latter two you can. Regardless of where you stand today, it’s always smart to work on improving your credit and paying down your debt so when the time is right. You’ll be in the best position possible to get the best interest rates available.
Chime Disclosure - Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC.
1Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account.
^Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account.
Chime APY Disclosure - The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of October 25, 2022. No minimum balance required. Must have $0.01 in savings to earn interest.
Betterment Cash Reserve Disclosure - Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II.