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Can my bank change my savings account interest rate without telling me?

Unfortunately, banks have plenty of flexibility to leave you in the dark.

When interest rates drop, the growth of your savings slows — and it can happen without you even knowing it. Your account’s terms and conditions often allow your bank to change your interest rate without notification. Learning how to predict these changes and find out if they affect your account can help you stay on top of your finances.

Why are there interest rate changes?

Banks are private businesses with the right to set and change interest rates as they please. However, these rate changes don’t come out of nowhere — the interest rate on your savings account usually fluctuates for three different reasons:

  • Inflation. Interest rates tend to move in the same direction as inflation. So, if inflation is high, your bank may follow suit by raising interest rates.
  • Supply and demand. Credit rates are directly tied to savings rates. If borrowers are willing to pay a higher interest rate for a loan, you’ll earn a higher rate on your savings account because the bank will be lending out your funds.
  • The Federal Reserve. The Fed sets target rates for banks. By law, banks aren’t required to adopt the federal funds rate, choosing instead a higher or lower rate as they’d like. But the Federal Reserve offers securities and other incentives to banks that tend to keep their APY rates close to the Fed’s.

What an interest rate change means for your savings

You may think your money is working as hard as possible, growing at the APY you signed on to when opening your account. But chances are good that the interest rate on your savings account has changed without your knowledge.

Banks are given a lot of freedom in how they operate — including the freedom to change your APY without notification.

The Truth in Savings Act doesn’t require banks to notify customers of interest rate changes on variable-rate accounts. Rather, you may notice it down the line on, say, a bank account statement reflecting the adjusted rate.

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How to stay aware of interest rate changes

Remain vigilant to make sure you’re earning the best possible interest rate on your savings account. Review your account’s terms and conditions to find out if your bank is contractually obligated to notify you of rate changes. If they aren’t, it’s up to you to keep track.

Check your monthly account statements to stay on top of your current interest rate. You’ll also stay aware of your total balance to the interest you’re earning, helping you to know when it’s time to shop around for the best interest rates.

If your APY drops after a Fed rate cut, there are three things you could do with your savings to ensure you still get a competitive rate.

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How to earn the best interest rate on your savings account

Take control of your finances while ensuring that interest rate cuts minimally affect your savings bottom line.

Shop around

Review your savings account at least each quarter for the details you’ll need to compare other, potentially better options on the market. You’ll find a huge range of savings account products offering strong rates for growth, including high-interest savings accounts and saving bonds.

Consider a CD

Certificates of deposit come with a set interest rate for the term of the deposit. CD rates are often stronger than those for traditional bank accounts, earning you more on your investment with little risk.

Compare savings accounts for earning interest

Consider these savings accounts or use the table below to sort accounts by their interest rates. Want to compare your top picks side-by-side? Check the “Compare” box next to your favorite accounts.

Aspiration Spend & Save Account logo

Aspiration Spend & Save Account

★★★★★
Axos Bank High Yield Money Market account logo

Axos Bank High Yield Money Market account

★★★★★
American Express® High Yield Savings logo

American Express® High Yield Savings

★★★★★
Name Product Annual percentage yield (APY) Fee Minimum deposit to open
Aspiration Spend & Save Account
Finder Rating: 4.2 / 5: ★★★★★
Aspiration Spend & Save Account
5.00%
$0 per month or $7.99 per month for Aspiration Plus ($5.99 per month if you pay annually)
$10
Deposits are fossil fuel-free. A spend and save combo account with unlimited cash back rewards and deposits insured by the FDIC and a $100 bonus when you spend $1,000 in your first 60 days.
Axos Bank High Yield Savings
Finder Rating: 4 / 5: ★★★★★
Axos Bank High Yield Savings
0.61%
0.25%
0.15%
$0
$250
No monthly maintenance fees. No minimum balance requirements. Interest compounded daily.
BlockFi Interest Account
BlockFi Interest Account
Up to 8.25%
$0
$0
Score up to 8.25% APY with this free crypto-interest account. Not available in New York and not FDIC insured.
American Express® High Yield Savings
Finder Rating: 4.6 / 5: ★★★★★
American Express® High Yield Savings
0.40%
$0
$0
Enjoy no monthly fees and a competitive APY with this online-only savings account. Accounts offered by American Express National Bank, Member FDIC.
Gemini Earn
Gemini Earn
Up to 8.05%
$0
$0
Watch your cryptocurrency earn up to 8.05% APY with this nationwide account. Not FDIC insured.
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Compare up to 4 providers

The impact of an interest rate cut

Stacks of quarters visualizing dropping interest ratesAn interest rate cut of 0.25% or 0.50% may not sound like much. But even a small adjustment can result in a sizable difference to your savings balance.

Let’s say you’ve saved up $15,000 in an account with a 2.50% APY. If your bank drops that rate to 2%, you’ll lose $76 in interest you’d otherwise accrue over the course of a year.

The effect of compound interest can quickly multiply the amount of money you’re effectively missing out on. And with the potential for interest rates to continue dropping, the net effect of a lower interest rate put a dent in your savings goals.

Bottom line

Banks are not legally required to notify you when they decide to change your account’s APY. Pay attention to the rate in your monthly statements, and take your money elsewhere if you think you’re at an unfair rate.

Compare savings accounts and CDs from a range of banks to grow your money — and reach your financial goals — more quickly.

Frequently asked questions

Images: Shutterstock

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