You may not be earning as much interest on your savings account as you could.

Some of the biggest banks in the U.S., including Chase, Bank of America, and Wells Fargo, offer savings accounts that pay just 0.01% APY. However, other institutions offer savings rates of 5.00% APY or more.

Why is there so much variation in savings account rates? It's a mix of factors, from market forces to the rate policies at each individual bank. Let’s take a closer look at how banks set their savings account rates — and how to find the highest offers.

Factors that affect bank savings interest rates

Banks are private businesses, so they can set their own savings account rates according to their individual objectives and priorities. For example, some banks may offer higher rates to encourage more deposits, which they can lend out to increase their loan portfolio and generate revenue.

However, in addition to internal policies, there are forces that affect the annual percentage yield (APY) on savings accounts at all banks, including:

• The federal funds rate: When the Federal Reserve adjusts its target rate up or down, bank account rates usually follow.

• Competition: Banks can increase their savings rates to compete for more deposits from new customers.

• Overhead: Costs such as shareholder pay and operations at physical bank branches impact savings rates at each bank. That's one reason online-only banks can offer higher APYs than traditional banks.

• Loan and credit card rates: For some banks, the main source of revenue comes from charging high APR and paying low APY.

Read more: How do banks make money?

Can savings account rates change at any time?

Savings accounts have variable interest rates, meaning the interest rate you earn can change at any time without notice.

Rate changes, however, are usually triggered by specific events. For example, your bank's savings interest rates are likely to change when the Fed adjusts its target rate, which can happen up to eight times a year. While the target rate has held at 5.50% since July of 2023, it increased eight times in 2022, from a low of 0.25% to a high of 4.50%.

Read more: Should you open a savings account or CD before the Fed’s next meeting?

How to get a better savings account rate

Many people are missing out on interest by depositing their savings at large institutions or even keeping the money in a checking account. Here's how you can upgrade your banking rates:

Find a new kind of bank

Switch from a big bank to a credit union or online bank. Credit unions generally offer higher APYs and lower fees than banks since they don't have to pay shareholders. Online-only banks are also competitive since they don't have the overhead costs involved with running physical bank branches.

Use a different type of account

Another way to boost your earnings is to switch to a high-yield savings account (HYSA), money market account (MMA), or certificate of deposit (CD). With these account types, you can find interest rates over 5%. By comparison, the average traditional savings account rate is just 0.45%, according to the FDIC.

Review the account details

Complicated fees and account requirements can quickly erode your interest on a savings account. Some savings accounts charge fees if you don't maintain a minimum daily balance or reach a minimum average monthly collected balance. You can also lose money on your savings if there's a monthly maintenance fee on the account.

For example, Bank of America Advantage Savings accounts currently pay 0.01% APY and charge an $8 per month maintenance fee on accounts with less than $500 deposited every day during the month.

If you keep $500 on deposit all year, you'll avoid the fee on this account, but you'll earn just $0.05 in total interest. If your balance drops below $500 just one day per month, you'll lose $96 a year to account maintenance fees.

That’s why it’s important to shop around for a savings account and choose one with a high APY and few, if any, fees — or one that makes it easy to get fees waived.