Why savings rates change, and why yours dropped

A savings APY is a variable rate. The bank can change it whenever it likes, usually with no notice, and the account terms you agreed to say so.

The main driver is the federal funds rate set by the Federal Reserve. When the Fed cuts, banks earn less on the money you have deposited, so they pay you less. When the Fed raises, banks can pay more, and competition decides whether they actually do.

The current target range is 3.50% to 3.75%, as published by the Federal Reserve on July 29, 2026.

This is the part savers notice and rarely see explained. Rate cuts tend to reach your account quickly. Rate rises tend to arrive slowly, if at all.

The reason is that the incentives are not symmetric. When the Fed cuts, the bank’s own return on your deposit falls immediately, and passing that on protects its margin. When the Fed raises, nothing compels the bank to share the increase. It does so only when the risk of losing deposits to a competitor outweighs the cost of paying more.

Which produces the single most useful habit for a saver: after any Fed move, check what your own bank did rather than what the news said. The spread between the best and worst accounts widens most in exactly those months.

The Fed is not the only cause, and if your rate changed when the Fed did nothing, one of these is usually why.

• An introductory rate ended. Promotional APYs run for a set number of months and then revert, and the revert is rarely announced loudly.
• You crossed a tier boundary. Tiered accounts pay the headline rate only above or below a balance threshold. Withdrawing can drop you into a worse tier.
• The bank stopped wanting deposits. A bank that has raised all the funding it needs has no reason to keep bidding, and will quietly cut while competitors hold.
• The rate applies to new customers only. Legal, common, and the reason your APY can differ from the one advertised on the same page you opened the account from.

Everything above is why. A specific bank rate published on a comparison page is accurate on the day it is written and drifts from then on, and the reader has no way to tell how old it is.

We audited this site’s own pages and found roughly sixty hard-coded APYs running between 80 and 135 basis points above what the banks were actually paying, with no mechanism to notice. They were removed rather than refreshed, because the same thing would have happened again.

What we publish instead is what a maintained primary source says. The FDIC national average for savings was 0.38% in its August 17, 2026figures, which is a useful benchmark precisely because it is not a quote for any particular account. For your rate, the bank’s own page is the only source that is right by definition.

Nothing urgent. Your balance does not fall when rates do; you simply earn less going forward, and there is no penalty for waiting a week to think.

Then, in order: check what your bank is now paying on its own rate page, check what competitive accounts pay, and put both numbers into the APY calculator to see what the gap is worth on your balance over the period you care about. A percentage point is an abstraction; a dollar figure is a decision.

If the gap justifies moving, do it in an order that never leaves the money unreachable.

The Rate & Fed Watch list emails you when the Federal Reserve changes its target rate, when the FDIC publishes new national averages, and when we publish a newly verified comparison.

It does notclaim to monitor every bank’s APY, because we have no rate feed and building the promise before the capability would be the same defect as publishing a stale rate. It also cannot tell you when your bank changes its rate. Only your bank knows that.

Why did my savings APY go down?

Because it is a variable rate and the bank is allowed to change it at any time, usually without advance notice. The most common trigger is the Federal Reserve cutting its target rate, which lowers what banks earn on the money you deposit, so they pass less of it on. A bank can also cut simply because it no longer needs deposits, or because an introductory period on your account ended.

Do banks have to tell me before cutting my savings rate?

Generally not for a variable rate that the account terms already describe as variable. Banks usually publish the current rate on their own rate page and update it there. That is why comparison sites listing specific APYs go stale so quickly, and why checking the bank's own page is the only reliable way to know what you are earning today.

What makes savings rates go up and down?

Mostly the federal funds rate set by the Federal Reserve, which sets the return banks can get on very safe short-term lending and therefore what they can afford to pay depositors. Competition matters too: online banks with no branches bid for deposits with rates, which is why they typically pay several times the national average. A bank that has taken in all the deposits it wants can cut its rate regardless of what the Fed is doing.

Why do savings rates fall faster than they rise?

Because the incentives are not symmetric. When the Fed cuts, a bank's own earnings on your deposit fall immediately and it has every reason to pass that on quickly. When the Fed raises, nothing forces a bank to pass it on at all, and many raise slowly or not at all until competition costs them deposits. This is a well-observed pattern rather than a conspiracy, and it is the practical reason to check your rate rather than assume it followed the news.

What happens to my savings when interest rates drop?

Your balance does not fall. A savings account cannot lose nominal value; you simply earn less on it going forward. Nothing needs to be done urgently. What is worth doing is checking whether your bank cut by more than its competitors, because the gap between banks widens most in the months after a Fed move.

Can a bank cut my rate but keep advertising a higher one?

It happens in a specific and legal way: the advertised rate applies to new accounts or to balances above a tier, while existing customers sit on a lower one. Some banks also run introductory rates that revert after a few months. If your APY does not match the headline figure on the bank's own site, look for a tier table or an expiry condition in the terms.

Should I move my money every time rates change?

Only when the gap is worth the effort, and the way to know is to work out the dollar amount rather than reacting to the percentage. On a modest balance a small difference is not worth a new account. On a large one, or over several years, it can be substantial.