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Current Checking Account Rates February 2024

Last updated 04/30/2024 by

Benjamin Locke

Edited by

Summary:
In the month of February, high-yield checking accounts continued to perform well, with the highest APYs at 7.23% (with terms and restrictions) and most leading account at around 5.25%. This could be seen as a positive effect of the Federal Reserve’s economic policies.
In the US for February 2024, checking account interest rates range from 0.00% APY to 4.625% APY, with the average national rate at about 0.07% APY, according to FDIC data from February 20, 2024. While most banks offer rates close to this average, the highest rate available is 7.23% APY. This data is very similar to that of January 2024, where the top checking account rate was also 7.23% This stability underscores the Federal Reserve’s effective management of the financial sector, preserving the appeal of these accounts. As the year unfolds, industry watchers continue to monitor interest rate trends closely, noting the consistency between the two months.

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So what’s up with the Fed lately?

In their January meeting, Federal Reserve officials expressed caution against cutting interest rates too hastily this year, amidst ongoing concerns about the potential resurgence of inflation. Despite being satisfied with the progress towards reducing inflation and achieving full employment, the minutes from the meeting highlighted that the economic outlook remained uncertain, prompting officials to stay particularly vigilant about inflation risks. The Federal Reserve’s stance remained relatively hawkish, as indicated by Chair Jay Powell in a post-meeting press conference, emphasizing that while the next move might involve reducing rates, the immediate future did not foresee rate cuts, especially not by the upcoming meeting on March 20.
The discussion also touched upon the Federal Reserve’s quantitative tightening program, with considerations on slowing down the sale of US government bonds to reduce the balance sheet, a significant shift from the pandemic-era policy of buying trillions in debt to prevent a market collapse. Market reactions to these deliberations were subdued, with minor fluctuations in US stocks and Treasury yields. Moreover, recent inflation data has slightly adjusted market expectations for rate cuts, with traders now anticipating fewer cuts starting in June. Despite some progress in controlling inflation, Federal Reserve officials remain cautious, acknowledging both the achievements and the persistent risks that could impact the economy and consumer spending in the coming year.
Type of AccountJanuary’s Highest APYFebruary’s Highest APYChange (Percentage Points)
High-yield checking7.23%7.23%No Change

Pro Tip

The realm of alternative investments, including cryptocurrencies and real estate, offers portfolio diversification opportunities. However— it’s essential to weigh the associated risks and conduct in-depth research before diving in. Digital banking advancements and fintech innovations have transformed checking and savings accounts, providing features such as mobile banking, enhanced interest rates, and reduced fees, thus meeting the contemporary needs of consumers.” – Russell Noga, CEO of Medisupps.com.

Fed’s activity in 2023

In 2023, the Federal Reserve took decisive action in response to the evolving economic landscape by adjusting its interest rates multiple times. These hikes were part of the Fed’s strategy to manage inflationary pressures and stabilize the economy. Starting in February, the central bank initiated a series of rate increases, signaling its intent to ensure sustainable economic growth. By July, the cumulative adjustments brought the rate range from 5.25% to 5.50%. These moves reflected the Federal Reserve’s commitment to maintaining monetary stability and its proactive approach to addressing economic challenges.
DateRate Increase (basis points)New Rate Range
February 1, 2023254.50% – 4.75%
March 22, 2023254.75% to 5.00%
May 3, 2023255.00% to 5.25%
July 26, 2023255.25% to 5.50%

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How does the Fed change affect the interest on checking accounts?

The Fed’s interest rate policy affects the rates on checking accounts, as delineated below:
AspectDescription
Direct CorrelationChecking account interest rates are generally correlated to the federal funds rate. This means that if the Federal Reserve increases its interest rate, the interest rates on checking accounts are likely to increase as well, and vice versa.
Lag in ResponseWhile there’s a correlation between the Federal Reserve’s rate and checking account rates, the latter might not immediately adjust in response to changes made by the Federal Reserve. In other words, even if the Fed raises its rates, it might take some time before banks adjust the rates they offer on checking accounts.
Attracting DepositsAfter the Federal Reserve raises its rate, financial institutions might adjust the interest they offer on interest-bearing checking accounts. This is done to stay competitive and attract deposits. Banks want to encourage people to use their checking services, and offering competitive rates can be an effective way to do so.
Overall Financial Ecosystem ImpactThe Federal Reserve’s decision to raise or lower interest rates affects the entire financial ecosystem. This includes not just checking account rates but also APRs and APYs on various financial products.

Key Takeaways

  • During February 2024, the stability in the financial sector was evident as high-yield checking accounts continued to offer a max rate of 7.23% and most leading high-yield checking account offering around 5.25% APY.
  • The Federal Reserve’s recent meeting concluded with maintaining the current rate policy, reinforcing a period of financial stability and potentially impacting savings and checking account rates.
  • The Federal Reserve’s rate adjustments throughout 2023, culminating in a rate range of 5.25% to 5.50% by July, demonstrate its proactive approach to managing inflationary pressures and stabilizing the economy.

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