Varo Money Offers 5.00% APY Savings Rate Amid Fed Policy Shifts

As of July 8, 2025, the highest interest rate available on a savings account is 5.00% APY, offered by Varo Money. This rate is significantly higher than the current national average savings rate of 0.38%, which peaked at 0.47% in March 2024 before the Federal Reserve implemented three consecutive rate cuts in late 2024. The decline in savings rates from the nearly two-decade highs seen in 2022 and 2023 can be attributed to the cooling off of inflation rates and the easing of monetary policy by the Federal Reserve.

The outlook on inflation and the U.S. economy remains uncertain, making further rate cuts unlikely in the near future. This suggests that interest rates on savings accounts may remain stable for the time being. However, it is important to note that banks can and do change the interest rates on savings accounts at any time, for any reason. Changes frequently occur following Fed meetings, which are held approximately eight times per year.

When evaluating savings accounts, it is important to seek competitive APYs to maximize your earnings. Many high-yield accounts have no minimum balance requirements nor monthly maintenance fees, but make sure to read the fine print. You should also ensure the account provides easy access to withdrawals or transfers when needed. Remember to verify FDIC insurance coverage, and don’t forget that some banks offer attractive welcome incentives for new customers.

Technically speaking, there isn’t a special banking deposit product called a “high-yield savings account.” The term is commonly applied to accounts that offer the highest APYs, commonly orders of magnitude greater than the average. While the national average savings rate stands at 0.38% today, many high-yield accounts offer rates exceeding 4%. Traditional accounts often provide physical branch access with lower rates, while high-yield accounts are typically offered by online banks and feature higher rates, but limited in-person services. But regardless of what savings account you use, you can expect to pay taxes on any interest earned.

Consider opening a high-yield savings account for these advantages: significantly higher interest rates compared to traditional savings accounts, often free from minimum balance requirements or monthly fees, easy access to your funds, ideal for emergency funds or short-term savings goals, and FDIC-insured, providing the same protection as traditional banks.

There’s no fixed schedule for when your high-yield savings account’s APY might change. Banks and credit unions can adjust these rates whenever they choose. Typically, though, you’ll notice rate changes follow shifts in the Federal Reserve’s benchmark rate—when the Fed moves the federal funds rate up or down, banks often do the same with their savings products.

You’re not restricted from having savings accounts at different banks, so switching is an option. However, make sure the higher APY justifies the hassle, and watch for any minimum deposit requirements that could impact your returns. With many banks, withdrawing from a high-yield savings account is straightforward—transfers to external accounts can usually be done online in just a few steps. Still, know that many institutions may limit you to six withdrawals per month.

Because they operate without physical branches, online-only banks may be able to offer higher rates on savings accounts, making them an attractive option for many savers. As long as your HYSA is with an FDIC-insured bank or an NCUA-insured credit union, your money is protected up to the insurance limit. We’ll also note you’re not at risk of losing your principal like you could in the stock market—though inflation could erode your purchasing power over time.