Is Now The Time To Shop Savings Accounts That Earn 3.50% APY?

Shawn Plummer

CEO, The Annuity Expert

With Federal Reserve rate increases in the past year, some savings accounts now offer more than a 3.50% annual percentage yield (APY). So if you’re looking for a high-yield savings account, it’s worth your while to shop around and compare rates.

Rates are increasing, but here’s how to ensure your money still earns a good yield.

Earn The Highest Interest Rates On Savings Today

Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.

TermInsurance CompanyInterest Rate
N/AUFB Bank Savings Account5.02%
N/AGreat Lakes FCU Money Market4.40%
12 MonthsWestern Alliance Bank CD5.01%
36 MonthsOceanview Fixed Annuity5.10%
48 MonthsAmerico Fixed Annuity5.05%
5 YearsAspida Fixed Annuity5.50%
7 YearsAmerican National Fixed Annuity5.45%
*Fixed annuities are only for saving money to use in retirement.

Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this article.

Find And Compare The Highest Interest Rates

Find the highest interest rates for your savings ranging from 3 months to 10 years, all in one place.

Is 3.50% a high rate?

According to Federal Deposit Insurance Corp., the national average savings rate was 0.21% APY as of October 2022, which is higher than in recent years. In January that year, the savings rate was a mere 0.06%. Although this percentage has increased, high-yield accounts often offer much more interest; some even boast rates of up to 3%.

In short, investing $10,000 into a savings account with 0.21% APY will only grow by $21 after one year. However, if you put that amount of money into a high-yield savings account earning 3.50%, your bank balance will increase to about $350. That’s much more worth your while!

Not only does the interest on your money earn interest, but these earnings grow exponentially over time. This effect is known as compound interest, and it can rapidly increase your balance if you have a high rate and an extended timeframe.

Why are Yields (APYs) increasing?

The annual percentage yield (APY) has increased due in part to inflation. To lower inflation rates, the Federal Reserve increases the federal funds rate, which banks use when borrowing money from other banks. In 2022, there were multiple times wherever we had to increase the federal fund rate.

It is expected that the inflation rate will continue to go up. However, in November, the Federal Reserve said it would likely need to keep increasing interest rates so inflation can go back down to its targeted goal.

Rising rates improve the situation for savers while making it more difficult for borrowers; this can eventually help to decrease inflated prices. This is what has occurred in the current year, and it is due to both the Federal Reserve and healthy competition.

Accounts that offer the best rates follow suit with their competitors by increasing their APY. Some of these accounts have recently increased rates multiple times in a few months. This has caused the best yields to be now over 3%. Before this, in January 2022, some of the highest-earning rates were less than 1.00% APY.

Where do I find top savings accounts?

Unlike big banks, online savings accounts offer much higher interest rates. One of the reasons is that traditional banks have plenty of overhead costs associated with maintaining physical bank branches. Online institutions don’t have this same burden, so they can offer their customers better deals at high-interest rates.

Am I at risk of losing my money if I invest it in a high-yield online account?

Your money is always safe with online banks and credit unions. However, in one were to fail, you are protected up to $250,000 by either the FDIC (for banks) or National Credit Union Administration (credit unions).

Some financial technology companies offer savings accounts with high yields. These businesses typically partner with FDIC-insured banks to protect customer deposits in case of failure, so the funds can still be federally insured. Always check the company’s website or contact customer service before signing up to see if your deposited funds are protected.

What should I look for in the fine print?

Some savings accounts boast interest rates much higher than 3% APY, but only up to a limit- like $500. So if you have more money that you want to save, look for an account with a higher limit. Any amount over the set limit will likely accumulate very little interest.

Some institutions require you to open a connected checking account to earn their best savings rate, while others won’t. When looking for the right bank or credit union, aim for one with simple qualifications that you can quickly meet.

Are there any fees?

Fees can cut into your savings, so you want to choose a bank that either has no fees or will waive them if you keep a minimum balance. Another thing to look for is whether the account has a high yield. The best savings accounts have both of these features.

Are there other ways to save money to give me a high yield?

A certificate of deposit may be a better place to earn interest than a high-yield savings account.

If you take out your money from a CD before the end of its term, generally, you will be charged with a penalty that could last for months or even years. On the other hand, the upside of having immediate access to cash is higher yields; for instance, many CDs offer rates over 4% APY for two-year terms. Nevertheless, if you feel like you would need regular access to your funds, then despite lower yield rates, it would be wiser to choose a high-yield savings account instead.

A fixed annuity would be the optimal place to earn interest if you’re saving for retirement or over 59.5.

Unlike a CD, you take out some of your money annually from a fixed annuity before the end of its term. Of course, the upside of having immediate access to cash is higher yields; for instance, many annuity rates exceed 5% APY for three-year terms. Nevertheless, if you feel like you would need regular access to your funds, then despite lower yield rates, it would be wiser to choose a high-yield savings account or money market account instead.

Next Steps

With rising interest rates, ensuring your money is working hard for you is more important than ever. A high-yield savings account is a great way to do that, and there are plenty of options. It’s worth taking the time to compare rates and find the best account for your needs. And if you need help sorting it all out. Contact us today for a free quote.

Is Now The Time To Shop Savings Accounts That Earn 3.50% Apy?

Request A Quote

Get help from a licensed financial professional. This service is free of charge.

Contact Us

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

Scroll to Top