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Kendall Little is a journalist covering personal finance for NextAdvisor based in New York. Previously, she was…

Ally Bank just raised the rate on its high yield savings account from 2% to 2.10% APY. 

That makes the latest in a string of rate increases from Ally and other online banks over the past few weeks, and the first from Ally after the Fed’s latest interest rate hike.

Experts predict interest rates will only continue to increase through the rest of 2022.

Ally is already one of our picks for the best high-yield savings accounts, and ranks among the best savings account rates today. Here’s why, and what the new rate means for your savings:

Let’s say you have $10,000 reserved as an emergency fund in an account with Ally. 

At the previous 2% APY, you could earn about $200 in interest over a 12-month period. With the new 2.10% APY, the same balance and year-long period could net you $210 in interest payments. 

That may not seem like a lot of money in the long run, especially considering the large $10,000 balance. But compare that to the current national average savings interest rate of 0.17%, which is more in line with what you’d find at a traditional national bank with physical branches. With the same $10,000 in a traditional savings account earning that average, you’d only increase your earnings by $17 over the course of a year.

Now consider you have $10,000 in your account today, and you can contribute an additional $100 per month over the next year. Here’s how much you could earn by the end of the year earning 2.10% APY, compared to making no additional contributions, and by contributing the same amount with the national average 0.17% APY.

For more comparison, here’s a look at the current yields offered by other banks on our list of best savings account rates:

Ally Bank is one of our top-rated banks for its all-around great customer service, range of products, and competitive interest rates. It’s best for anyone looking for one online bank to handle all of their financial needs, from checking to savings and investing.

Ally Bank is among our favorite banks for high-yield savings thanks to its great customer service and because it consistently offers one of the top APYs on the market. There are no monthly maintenance fees and no minimum balance requirements to open or maintain your account. Ally also offers a bucketing feature that allows you to dedicate different amounts in your online savings account to different goals, like an upcoming vacation, down payment on a home, or emergency fund.

In addition to its high-yield savings account, Ally offers CDs, and interest-earning checking account, investment and retirement funds, and even loans. 

However, we also believe that all the banks in the table above and on our list of best high-yield savings accounts make for great places to store your cash. Each of these banks offer low or no minimum deposit requirements, no monthly fees, and APYs among the highest available right now. 

What’s most important is finding a bank with the features best suited for your needs (mobile app access, unlimited withdrawals, savings tools, etc.) and start saving. You can set up automatic transfers to your savings whenever you’re paid to make the process even easier. Then, you can focus on other financial goals like paying down debt or buying a home. 

Since the start of the pandemic in spring 2020, the Federal Reserve held rates at near-zero. But in response to inflation and other economic factors, the Fed began raising interest rates earlier this year. Most recently, the Fed announced its fifth interest rate increase of the year so far, to a target range of 3%-3.25%.

Online and traditional banks typically base their interest rates on the federal funds rate set by the Fed. That’s true for the APRs they charge borrowers (credit card interest, mortgage rates, and more) and the APYs they pay customers on their deposits into savings accounts or CDs.

As the Fed continues to raise the federal funds rate, you can expect APYs on savings accounts, as well as money market accounts and CDs to increase as well. Experts say now is the time to make sure your savings are in the best account to help you meet your goals.

 Just remember, these rates are still marginal. Even the best high-yield savings accounts only earn about 1% on your balance. They’re a safe, reliable way to store short-term or emergency savings, but they’re not a good vehicle if you’re looking to build wealth. For longer-term investments and retirement savings, it’s smart to diversify your portfolio with investment accounts like index and mutual funds, and retirement accounts like a 401(k) or Roth IRA.

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