Top Online Banks Quietly Cut Savings Rates

American Express quietly cut its high-yield savings account fees this week, trimming to an annual yield (APY) of 3.70% to 3.60%. The move may not make headlines, but it is part of a wider trend among major consumer banks affecting millions of savers.

In recent weeks, some high-income savings accounts offered by common names have been lowered. Marcus by Goldman Sachs, Capital One and Sofi all maintain a rate of about 3.80% or slightly lower. However, those who track the rates know intimately that these popular brands rarely offer the best yield.

Currently, the top 10 savings account fee trackers have top yields.

Always a step behind

Even when rates rose rapidly in 2023 and 2024, the most recognisable online banks consistently provided rates that delayed the best offers on the market by about one point. At this point, some credit unions and online bank accounts still earn 4.30% north, but the big names are close to 3.60% to 3.80%.

This is nothing new. Banks such as SOFI and Capital One prioritize customer acquisition and retention through brand trust and ease of use. For some consumers, it’s a fair trade-off. But that 1% gap could quickly increase in others, especially in large emergency funds and short-term savings parking lots.

The $25,000 balance, which earned 4.60% instead of 3.60%, adds $250 in interest per year with no additional effort. The power of compound interest on these additional amounts can really add over time!

Why is the savings rate falling?

Interest rates on savings accounts usually follow the policy movements of the Federal Reserve. After more than a year of rate hikes, the Fed has stabilized its benchmark rate. However, there is another factor where there are many rejections – the bank must be able to lend money and make a profit.

Loans are slow so banks need (and need) less deposits. Some banks interpret it as a clue to lower the rates offered to depositors, especially when interest rates offered to depositors are already reduced to depositors or when new cash needs are limited.

American Express, for example, builds a strong deposit base through consistent digital marketing and cardholder mutual promotion. This gives you less incentive to maintain prices as high as competitors, who rely on best-in-class yields to attract new customers.

The same applies to Marcus, Sofi, and others who currently offer a wide range of financial products and services. As many customers sign up for checking accounts, loans and investment product offers, the need to offer highly competitive interest rates at savings account interest rates decreases.

What should I look for in the future?

If you want to earn more without taking risks, don’t settle for celebrities. Dozens of FDIC and NCUA insurance agencies currently offer far more than 4.20% of fees. Some of these include small online only banks or local credit unions that have recently expanded their digital reach.

These accounts are still insured and safe to use, and you can create a great savings account to park your emergency fund. To make shopping easier, maintain a regularly updated list of the best high-revenue savings accounts, including lesser-known names that are consistently high on the charts.

The Fed has not announced any immediate fee cuts, but the market expects at least one by the end of 2025. If that happens, the more banks, the savings rate could drop even further.

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