Americans Earned $315 Billion on Their Savings in 2023. Here's How to Get the Highest Interest Rate Possible

The nice thing about keeping money in the bank is that it's basically a risk-free means of growing wealth. If you bank at an FDIC-insured institution and limit your deposits to $250,000 (or $500,000 if you have a joint account with someone else), your money will be protected in the event of a bank failure. On the other hand, if you put your money into the stock market, there's the risk of losing it.

Historically, the stock market has delivered much higher returns on people's money than bank accounts over the long term. But in 2023, following a string of interest rate hikes from the Federal Reserve, banks started paying more generously. 

As a result, Americans were able to earn a whopping $315 billion in interest on their savings last year. That's four times as much as the $78.7 billion in interest savers earned in 2022.

Meanwhile, there's still plenty of opportunity to earn a lot of interest on your money in 2024, since banks are still offering pretty attractive rates. But if you want to snag the highest interest rate possible, there's one key move to make.

Our Picks for the Best High-Yield Savings Accounts of 2024

SoFi Checking and Savings APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. Min. to earn $0 Open Account for SoFi Checking and Savings Member FDIC.	APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.	Min. to earn $0
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of May 31, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of May 31, 2024	Min. to earn $1

Open a CD

It's more than possible to find a high-yield savings account paying upward of 4% interest right now. But if you truly want the best interest rate on your money, then a certificate of deposit, or CD, is the way to go.

Since CDs require you to tie your money up for a preset period, they tend to offer higher rates than savings accounts. Also, with a CD, the rate you lock in is guaranteed throughout your CD's term. 

With a savings account, you could start out earning 4.25% on your money. But if interest rates fall during the year, come December, your savings account might only be paying 3.75%. On the other hand, if you open a 12-month CD paying 5.10% this month, that's the rate you'll get through May 2025. 

Finding the right CD

Within the realm of CDs, you might see different rates based on different terms. These days, shorter-term CDs are typically paying a bit more than longer-term ones. But there's a reason for that.

The Fed is expected to cut rates at some point in 2024 and then continue on that path as inflation cools. Because of this, banks need to minimize their risk for longer-term products, which is why a given institution may be willing to pay you 5.10% on a 12-month CD but only 4.20% on a 60-month CD.

Either way, it pays to not only look at different banks to see what their rates are, but also, compare your options with regard to CD terms. Of course, do keep in mind that the rates CDs are paying today may not be available for a long once rates start to fall. So while you may be inclined to open a 12-month CD because its rate is the highest one a given bank offers, it could make more sense to accept a slightly lower rate on a longer-term CD.

You might also consider building a CD ladder. This has you opening multiple CDs with varying terms, so your money frees up at different times. Remember, CDs often impose a penalty for taking an early withdrawal. A CD ladder could help you avoid one. 

It's amazing to see how much money Americans earned in interest in 2023. If you want to enjoy your fair share of interest income in 2024, shop around for CDs sooner rather than later -- before the Fed starts lowering rates.