The average high-yield savings account now offers 4.5 percent annual percentage yield, down from a peak of 5.5 percent reached last year but still providing solid returns for savers who maintained their deposits in high-yield accounts.
"Savers who locked in higher rates during the peak are now facing the reality of declining yields," said Bankrate Chief Financial Analyst Greg McBride. "However, 4.5 percent is still a meaningful return compared to the near-zero rates of the pre-2022 era."
The decline in savings rates reflects the Federal Reserve's shift away from its aggressive rate-hiking campaign. As the Fed has held rates steady, banks have reduced the yields they offer on deposit accounts while maintaining high rates on new loan originations.
Financial advisors recommend that savers compare rates across institutions and consider moving money to higher-yielding accounts if their current bank has reduced rates. "The spread between the best and average savings rates can be significant," McBride said.
Money market funds and certificates of deposit continue to offer competitive rates, with one-year CDs averaging 5.1 percent at the best institutions. The spread between savings accounts and CDs has widened, making fixed-term deposits more attractive for savers with longer time horizons.