I had a reader leave a comment over the weekend on my best high-yield online savings accounts page asking whether or not these savings accounts could still be classified as “high-yield” since the rates were so low. It’s a fair question, and one that I thought I would tackle here on the blog.

Interest rates are currently ranging from 0.90% to 1.35% on these accounts. Historically speaking, that is a low interest rate. I remember when these high-yield savings accounts were at their highest (2007-2008). They were touting rates in the 4% to 5% range. It certainly appears that rates are no longer high.

But you can’t stop your comparison there. What makes these accounts so special is that they don’t have the internal expenses that most brick and mortar banks have. As a result they are consistently able to offer a better rate on savings accounts than banks like Chase and Bank of America.

And they do. Right now most are offering at least 3 times what Chase and Bank of America offer. So if you compare the savings rates at the online banks against the brick and mortar banks, the term “high-yield” still holds up.

The only reason they are as low as they are is because the Federal Funds Rate and the LIBOR Rate (two factors that drive bank interest rates) are at historical lows. They were forced lower to supposedly keep inflation rates at normal levels.

All that to say, across the industry, banking rates are low. So the question then becomes, where do you turn to get a better rate without sacrificing the security of FDIC insured banking product? You can’t turn to the stock market or peer lending. Both are too risky. Some have turned to reward checking (some offering around 4%), which is probably a good move for those who can work within the requirements of such an account.

My money is staying put in my high-yield savings account. I’m there first and foremost for the FDIC insurance I get. I also like that these accounts provide clear separation from my checking account, and they provide the liquidity to actually use the money if it’s needed. If my account gets too full, then I’ll take the overage and put it in more risky investments.

Rates will return. These banks didn’t put out teaser rates, just to collectively drop them to the floor. They are low for a reason. Once the major banking rates mentioned above return to normal levels, the high-yield rates will be back. I’m fine sticking around till they do.

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