Which Account Type Typically Has the Highest Interest Rate?

Written By
G. Dautovic
July 06,2023

When discussing savings options, a question that often pops up is, “Which types of accounts have the highest interest rates”? Nearly 95% of American households store their lifetime savings in banking or savings accounts. These accounts are not only secure and convenient, but they can help users earn money on their savings by collecting interests. 

However, according to CNBC statistics, average savings accounts earn a minimal annual percentage yield (APY), averaging around 0.06%. Many savings account users tend to opt for it as the most accessible and widely offered bank account without genuinely considering the benefits of a high-yield savings account. 

Nonetheless, learning about the different savings account types and choosing the one that pays the highest interest rates, can help you increase your interest earnings significantly.

In this guide, you can learn more about which savings account will earn you the most money. Find the best type of savings account for your financial goals below. 

Things to Consider Before Opening a Savings Account

Many savings account users overlook the importance of higher interest rates on high-yield savings accounts because their potential is limited unless you invest heavily.  However, your money might rest in the same account for months or years, and understanding the real potential of savings accounts interest rates can help you increase your savings. 

The average savings account will earn its owner a pittance. Say you put $10,000 in a savings account with an interest rate of 0.06% APY. Within one year, you’ll have earned a “mind-blowing” three dollars.

Put that money in a high yield savings account, and with a 0.5% APY, you’ll be looking at $25 bucks instead. Now, while that may not seem like much, give it a few years, or put in 5-10x more money, and you’ll be looking at much bigger numbers.

Some of the things to consider when opting for a high-yield savings account include:

  • The best rates are often only available from online banks
  • Money transfers between a high-yield saving account and the checking account are fast and seamless
  • Factors such as initial deposit, minimum balance, and account fees can help you decide on the best account for your needs. 

Types of Accounts That Have the Highest Interest Rates

Now that you know what difference the interest rate on your bank account can make, it is time to find out what savings account earns the most money. Here are the main differences between the different types of bank accounts (we’ve already discussed high-yield savings accounts, so we’ll skip them here).

Regular savings accounts are the most convenient to users who need to access their funds on a daily basis - but offer a very low interest-earning potential. 

Money market accounts provide some flexibility, check-writing features, and ATM access. The average interest rate of these accounts is between 0.08% APY and 0.18% APY, depending on the balance you have on them. Think of them as a mixture of standard and high-yield savings accounts.

Certificates of deposit, or CDs, represent the best kind of savings account for accumulating interest. These accounts only allow you to deposit your money, but access to it will be limited until a certain date. 

Other alternatives to standard savings accounts that accrue interest include cash management accounts and long-term accounts. In both cases, access to funds is limited, but interest rates will be higher.

So, to answer the most important questions:

  • What type of savings account earns the most interest? A certificate of deposit account.
  • Which type of bank account offers the least interest? A regular savings account.

Savings Accounts To Earn More On Interest: All You Need To Know

If you are new to the world of bank accounts, you might feel overwhelmed and confused.
Let’s take a look at the different types of savings accounts we’ve mentioned above in more detail in the next section.

  • Regular and High-Yield Savings Accounts - When choosing a savings account, the first important decision you will have to make is choosing the right bank. The second is finding the right savings account type. Regular savings accounts are by far the most popular ones, and they allow account holders to safely store their money, quickly access funds and earn minimal interest. Basic savings accounts rates go from 0.01% to 0.06%. However, you might also be able to find high-yield regular savings accounts that offer rates as high as 0.5%.
  • Money Market Accounts are a great alternative because they offer a high level of flexibility and versatility. Account-holders can write checks, withdraw money, and are federally insured. And, money market accounts offer higher rates, which equals higher earnings. At the same time, it isn’t uncommon for money market accounts to charge a fee and have strict minimum balance requirements. That is why this is usually a better alternative only for a bank account with a lot of money. In some cases, you can also find free money market accounts that don’t require any minimum balance - these are the best ones.
  • Certificates of Deposit - Among the different types of saving accounts, certificates of deposit (CD) are the ones that offer the best interests - as high as 0.6% or more. However, these accounts offer very limited access to funds and require a minimum deposit of at least $1,000 to open. 

Upon opening the account, you and the account provider will agree on withdrawal and transaction terms. Generally, you will need to state that you won’t withdraw the money for a certain amount of time (usually five to six years) and you’ll pay a penalty if you do.


Where can I put my money to earn the most interest?


So, which type of account will earn you the most money? We’ve already mentioned it above: certificates of deposit. However, high-yield savings accounts can be almost as lucrative but a little easier to manage. You should also consider checking accounts, because these days many will have higher interest rates than some savings accounts.

How much interest will I earn on 1,000 dollars?


It depends on your savings account rate! For example, at an APY of 0.5%, you will get five bucks within one year of keeping the money in your account.

Which type of bank account is best?


With so much choice, it is normal to wonder “what savings account should I have?”. However, the answer is not always easy. It all depends on the fees you are willing to pay, and what level of accessibility to funds you require. 

While certificates of deposit truly are a savings account that builds interest, you should only deposit here the money you know you can live without. Do not consider it an emergency fund unless you’re ready to pay penalties and reduce your interest earnings.

How many types of banking accounts are there?


These are the 6 most common types of banking accounts:

  • Checking account
  • Savings account 
  • Certificate of deposit (CD)
  • Money market account
  • Brokerage account
  • Individual retirement arrangement (IRA)
About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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