What Is APY? (And Is a High APY Actually Worth It?)
APY is the number banks love to advertise on savings accounts - but what does it actually mean, and how much does a higher one really earn you? Let's break it down.
Varun Attri6 min read
Topic guide
Savings and Banking: Where to Keep Your Money and What It Earns
Keep the money you spend in a checking account and the money you are saving in an insured savings account, where it earns interest. The rate to compare is the APY, which includes compounding. Online high-yield savings accounts usually pay far more than the national average, CDs lock in a rate for a fixed term, and money market accounts sit in between. Deposits at an FDIC-insured bank are insured up to $250,000 per depositor, per bank, for each account ownership category.
By the numbers
Key savings and banking figures
- National average savings rate
- 0.37%
- FDIC national rate, September 2026. Many online banks pay far more.
- Source: FDIC national deposit rates, via FRED
- National average 12-month CD
- 1.73%
- FDIC national rate, September 2026.
- Source: FDIC national deposit rates, via FRED
- Fed funds target range
- 3.75% to 4.00%
- Set by the Federal Reserve, as of Oct 12, 2026. Savings and CD rates tend to follow it.
- Source: Federal Reserve, via FRED
- FDIC insurance
- $250,000
- Per depositor, per insured bank, for each account ownership category.
- Source: FDIC, deposit insurance
What to know
Savings & Banking: the essentials
Compare APY, not the headline rate
APY includes compounding, so it is the number to compare between savings accounts. On a loan, the matching figure is the APR.
The national average is a low bar
Many large banks pay close to the national average on savings, while online banks and credit unions compete with much higher rates. The safety is the same as long as the bank is FDIC-insured, or the credit union NCUA-insured.
How to Choose the Best High-Yield Savings Account (Without Chasing Rates)
Match the account to when you need the money
Savings and money market accounts let you withdraw when you need to. A CD pays a fixed rate, but taking the money out before it matures usually costs a penalty.
CD vs High-Yield Savings vs Money Market: Which Is Best in 2026?
Build the emergency fund first
Three to six months of essential expenses in savings keeps a surprise bill from turning into credit card debt.
How to Build an Emergency Fund (Even If You're Starting From Zero)
Guides
Every savings and banking guide
How to Choose the Best High-Yield Savings Account (Without Chasing Rates)
The "best" high-yield savings account isn't just the one with the flashiest rate this week. Here's what actually matters — fees, minimums, FDIC insurance, and access — plus how much more your money can really earn.
Varun Attri5 min read
CD vs High-Yield Savings vs Money Market: Which Is Best in 2026?
CDs, high-yield savings accounts, and money market accounts are the three safest places to grow your cash in 2026 — all FDIC-insured, all paying around 4% APY. But they are not the same. Here's exactly when each one wins, with real rates and a simple decision guide.
Varun Attri6 min read
Difference Between Checking and Savings Accounts: A Simple Beginner's Guide
Not sure whether you need a checking account, a savings account, or both? Here's the simple difference between them, how each one works, and how to tell which type of account you already have.
Varun Attri9 min read
How to Build an Emergency Fund (Even If You're Starting From Zero)
An emergency fund is the cash cushion that keeps one bad month from turning into a financial disaster. Here's exactly how to build one - how much you need, where to keep it, and how to get there even on a tight budget.
Varun Attri6 min read
APR vs APY: What's the Difference (and Why It Matters)?
APR and APY look almost identical, but one shows what you earn and the other what you pay — and the gap between them can quietly cost or make you real money. Here's the difference in plain English, with examples.
Varun Attri6 min read
Simple vs Compound Interest: What's the Difference (and Why It Matters)?
Simple and compound interest sound similar, but one quietly makes you far richer (or poorer) over time. Here's the difference, with real numbers.
Varun Attri6 min read
How to Find Your Bank Routing Number on a Check (3 Easy Ways)
Need your routing number? Here's exactly where to find it on a check - plus how to get it without a checkbook, straight from your banking app or statement.
Varun Attri5 min read
How to Write a Check: A Simple Step-by-Step Guide (2026)
Writing a check feels old-fashioned, but you'll still need to know how. This simple step-by-step guide walks you through all six parts of a check — including how to write the amount in words, add cents, and avoid the mistakes that get checks rejected.
Varun Attri5 min read
Tools and data
Run your own numbers
CalculatorSavings CalculatorProject how your savings grow with regular monthly contributions and interest (APY) over time, and see how much of your balance is interest earned.CalculatorAPY CalculatorSee how much interest your savings earn at a given APY over time, and compare what different rates earn on the same balance.CalculatorEmergency Fund CalculatorFind how much you should keep in your emergency fund based on monthly expenses, and how long it takes to reach your target at your savings rate.CalculatorCompound Interest CalculatorSee how your money grows with compound interest. Calculate future value and total interest earned across different compounding frequencies.ReferenceBank routing numbersRouting numbers for major US banks, and how to confirm yours.ReferenceToday’s ratesCurrent savings, CD, mortgage and card rates from official sources.
Glossary
Key terms
- APY (annual percentage yield)
- APY, or annual percentage yield, is the yearly rate of return you earn on savings, including the effect of compounding.
- High-yield savings account (HYSA)
- A high-yield savings account is a savings account that pays a substantially higher APY than a typical traditional savings account, usually offered by online banks.
- Certificate of deposit (CD)
- A certificate of deposit is a deposit account that holds your money for a fixed term at a fixed rate, usually charging a penalty if you withdraw early.
- Money market account
- A money market account is a deposit account that pays interest like a savings account while adding some checking-style access, such as a debit card or limited check writing.
- Savings account
- A savings account is a deposit account meant to hold money you are not spending day to day, paying interest on the balance.
- Checking account
- A checking account is a deposit account designed for everyday spending, bill payment and direct deposit, typically with a debit card and unlimited transactions.
- Emergency fund
- An emergency fund is money set aside in an accessible account to cover unexpected costs such as a job loss, medical bill or urgent repair.
- Routing number
- A routing number is the nine-digit ABA number that identifies the US financial institution holding an account, used for checks, direct deposits and transfers.
- Federal funds rate
- The federal funds rate is the interest rate US banks charge one another to lend reserves overnight, and the Federal Reserve sets a target range for it to steer borrowing costs across the economy.