Chasing the highest-yield savings account: More trouble than it’s worth?

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Subscribe to enjoy similar stories. Ondrei Ronhaar, a 40-year-old energy broker, said that last week a friend suggested he switch banks to grab a higher-yield savings account. He didn’t bite.

It turned out the rate was only 0.4 percentage points higher than the 3.8% he is earning at Ally Financial. “We’re looking at a few bucks a month," he said. The hassle of opening a fresh account, with its new account numbers and logins, wasn’t worth the trouble, he reasoned.

He kept his $10,000 parked at Ally. It has been there since 2023. Even dedicated rate-chasers are finding that there isn’t much reason to hop from bank to bank in search of higher yields.

Interest offers aren’t quite as competitive as they were before the Federal Reserve started cutting rates in September. Because banks tend to lower their interest rates quicker than they raise them, today’s highest rate might not be tomorrow’s. The highest yield on a savings account tracked by Bankrate this month was 4.85%, down from 5.55% over the summer.

The national average rate is far lower at 0.48%. Storing $10,000 in a savings account with a 4.85% annual rate, compounded monthly, would earn about $2,700 in interest over the next five years if the rate stayed constant. Storing it in an identical account that earns half a point less would mean sacrificing just over $300 in interest during that time, according to NerdWallet.

“Consumers have become much more aware of where their money is parked and expect to earn something on it," said Scott Hildenbrand, chief balance-sheet strategist at Piper Sandler, an investment bank. “But that doesn’t mean they’ll jump at every slight increase. It has to be worth the effort." When the Fed was lifting rates at a rapid clip in 2022 and