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Published: Jul 26, 2023 4 min read
Emoji illustration of trashcan filled with money.
Olive Burd / Money

After a one-month pause, the Federal Reserve has again started hiking interest rates. And while the news is largely unwelcome by average Americans, it does have one silver lining: high-yield savings.

The average savings account APY (annual percentage yield) now stands at just 0.42%. But many banks are able to offer high-yield savings accounts with APYs of 4% or higher as a result of the Fed's year-long rate hike campaign.

Savings account APYs are variable, and financial institutions — most often smaller, online banks — are aggressive at raising their rates as Fed interest rates also rise. It's a way for these banks to be competitive and attract more customers.

For people eager to increase their savings, moving money to a higher-yield account can be an easy way to earn some extra interest. Yet new data shows that nearly 70% of middle-income earners have failed to make this shift, even in today's high-interest environment.