Which savings account typically offers the lowest interest rate?

A traditional savings account typically offers the lowest interest rate among the types of savings options provided. This is primarily because traditional savings accounts are designed for easy access to funds, which makes them less attractive to banks for earning interest on deposits. They often have lower minimum balance requirements and are accessible for regular transactions, but in exchange, they provide a lower interest rate.

In contrast, high-yield savings accounts generally offer higher interest rates, as they require higher minimum balances and may limit withdrawals or transfers. Money market accounts often combine features of both savings and checking accounts and can offer competitive interest rates, especially for higher balances. Certificates of Deposit (CDs) usually provide even higher interest rates than traditional savings accounts, as they require a commitment of funds for a set period, thus allowing banks to use those deposits for longer-term investments. This structure incentivizes customers with higher rates compared to traditional savings accounts.

Understanding the features and purposes of each type of account helps clarify why traditional savings accounts typically yield lower interest rates.