What is a Good APY?
- A good APY depends on the type of account and current market conditions.
- Regular savings accounts often pay below 1% — high-yield accounts go much higher.
- Compounding frequency makes a difference, not just the number you see.
- Is 5% APY good for savings? 5% APY is generally considered very good, but context matters.
- Always compare with the highest APY savings account today to know what's competitive.
Straight answer: a good APY (annual percentage yield) is one that's clearly above the national average. If the average savings account pays less than 1%, and you find an account offering 4%-5%, that's a good APY.
But it's not just about chasing the highest number. Think about:
Risk — Is it a regular FDIC-insured bank account or some fintech startup?
Fees — Does the account charge monthly fees that eat away the benefit?
Access — Do you lose flexibility by locking money into a CD?
So, while "what is a good APY" might look like a simple question, the real answer is "better than average, without too many strings attached".
For a standard bank savings account, honestly, anything above 1% APY is better than average right now. But if you're looking at high-yield savings accounts, many people would call 3%-5% APY good.
That said, banks can change rates anytime, so today's "good" APY could look small compared to tomorrow's offers. It's best to compare across different banks regularly.
Let's put numbers on it.
- $10,000 at 0.5% APY earns about $50 in a year.
- $10,000 at 3.5% APY earns about $350.
- $10,000 at 5% APY earns about $500.
The difference between a weak rate and a strong one can mean hundreds of dollars more every single year.
Yes, 5% APY is good for savings. In fact, it's excellent compared to historical averages.
Most traditional banks don't come close to this number, usually sitting well below 1%. Online banks, credit unions, or promotional accounts sometimes reach 4%-5% (and occasionally higher), but it's not the norm. If you can get 5% APY in a safe, insured savings account, that's about as good as it gets.
⚠️ Sometimes these high rates are temporary promotions or come with requirements (like maintaining a minimum balance or making monthly deposits). So check the fine print before celebrating, and if you want to learn more about percentages, we have a percentage change calculator 🇺🇸 worth checking out!
A high APY is usually anything over 4% for a savings account, though the bar shifts with inflation and market conditions. When interest rates are low, even 2% might be seen as high. Right now, with many accounts offering more, high returns start around 4%-5% and go up from there.
In short:
- Below 1% — poor APY.
- 2%-3% — decent APY.
- 4%-5%+ — high APY.
The truth is, the highest APY savings account changes all the time. Banks adjust their rates based on what the Federal Reserve is doing, competition, and their own marketing strategies. One month, an online bank might be leading with 5%, and the next, another steps in with a slightly higher offer. Traditional big-name banks usually lag far behind, sometimes still offering fractions of a percent, so if you're only looking at your everyday bank, you'll almost always miss out.
What really matters is staying up to date and checking regularly. Many people make the mistake of opening a "high-yield" account and then just leaving it for years without noticing the APY has dropped or that other banks are offering double the return.
So, what is a good APY? In short: better than the average, and ideally in the 3%-5% range for savings accounts. If you find something close to 5% APY, that's excellent, provided it comes from a safe and insured bank.
But don't just take the number at face value. Look at the fees, conditions, and whether the rate is long-term or just promotional.
To figure out exactly how much you'd earn, try our APY calculator 🇺🇸 or savings calculator 🇺🇸. They'll show you how your money can grow at different APYs, so you can see whether your account is truly good compared to the alternatives.
Yes, 10% APY is excellent, almost unheard of for a savings account. Most traditional banks pay well under 1%, so 10% is far above average. Just keep in mind that some high rates are promotional or come with conditions like minimum balances.
You can find the highest APY by comparing offers from online banks, credit unions, and fintechs. Check official bank websites or comparison tools regularly, since APYs change often.
Anything above 4% APY is generally considered high. While 2%-3% used to be strong when interest rates were lower.
The average savings account APY in the U.S. is usually below 1%. Big banks often stick to these low rates, which is why many people switch to high-yield savings accounts that can pay 3%-5% or more.
This article was written by Dawid Siuda and reviewed by Steven Wooding.