Banks Boost APYs to 5% Amid Fed Rate Cuts, Intensifying Battle for Deposits

Fortune's savings roundup.>

In October 2025, savings accounts with annual percentage yields (APYs) as high as 5.00% continue to be highly attractive to savers, as

strive to keep deposits in the face of evolving Federal Reserve policies. Varo Money stands out with its 5.00% APY, while Axos Bank, Presidential Bank, and are also providing rates at or above 4%, according to Fortune. The rise in high-yield savings options demonstrates banks' efforts to retain customers after the Fed initiated its first rate reduction of 2025 in September, signaling the start of a new easing phase, as reported in .

Following the Federal Reserve’s move to decrease the federal funds rate by 25 basis points in September, banks have been reevaluating their deposit approaches. Although the national average for savings rates remains at 0.40%, high-yield accounts are still delivering returns far above traditional savings, according to

. Experts predict that additional rate cuts—anticipated at the Fed’s meetings in October and December—could push banks to lower APYs, but the current competitive environment suggests that many will keep rates elevated to attract deposits, as noted in the Fortune Oct. 22 analysis.

Reuters preview.>

Strong quarterly results from banks have enabled them to continue offering high APYs.

Corp (IBC), for example, is expected to announce earnings of $0.84 per share on October 28, with revenue projected to climb 10.1% year-over-year to $46.09 million, based on the Reuters preview. Likewise, Preferred Bank’s third-quarter performance included a 16.91% return on equity and $74.98 million in revenue, surpassing analyst forecasts, according to a . These positive earnings, fueled by strong net interest income and fee-based revenue, highlight banks’ ability to offer competitive savings rates while remaining profitable.

The wider banking industry has also gained from more favorable funding conditions. American Riviera Bancorp saw a 16.8% increase in pre-provision net interest income for Q3 2025, helped by a 5.7% reduction in total interest expenses due to lower deposit and borrowing costs, as outlined in a

. At the same time, Affinity Bancshares maintained a net interest margin of 3.49%, reflecting careful management of its balance sheet amid fluctuating rates, according to a .

Ongoing innovation in financial services is intensifying the competition for deposits. Alpha Modus Holdings recently introduced AlphaCash, an AI-powered kiosk network aimed at serving unbanked and underbanked groups, as stated in an

, while VersaBank launched "Real Bank Deposit Tokens," using its federal charter to provide digital deposit receipts, as described in a . These developments underscore the sector’s increasing emphasis on technology and alternative channels to broaden their customer base and diversify income sources.

Industry experts advise savers to stay alert as the Fed’s rate-cutting cycle continues. “High APYs are appealing, but they may not last if the Fed proceeds with further reductions,” a Bloomberg analyst commented. “It’s wise for consumers to secure current rates when possible and watch for any future decreases.” The Federal Reserve’s upcoming October meeting is expected to be a pivotal moment for savings accounts, with additional cuts likely to change the deposit landscape.