The personal savings rate in America just hit its lowest level since the Great Recession — even as rates on savings accounts have risen. What gives?

Is your emergency fund stocked up enough?

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The personal savings rate, the amount of disposable income that people save, was just 4.4% in April, according to data from the US Bureau of Economic Analysis — that’s the lowest rate recorded since September 2008. That 4.4% compares to 6% earlier this year and upwards of 33% in April 2020, when Americans hoarded cash deep in the pandemic. And it’s happening even as savings account rates have begun to climb (you can see the highest rates you can get on a savings account here). So what exactly is going on here?

Some of this might be due to inflation, which now sits at a roughly 40-year high and rose at an 8.3% annual rate in April. Indeed, a Forbes survey released in May revealed that one-in-four consumers now say they are spending more money than usual, and a survey conducted in April 2022 by NerdWallet revealed 71% of savers changed how they saved in response to rising inflation, with the most-cited change being keeping more cash in a checking account even though checking accounts typically earn less interest than savings accounts. Keeping more cash at home is even less lucrative than a checking account, but it was the second most common change overall.

Others may have been fed up with low rates on savings: That same survey found that 79% made a change to their savings in 2021 in response to low interest rates; if savings account interest rates rise, 80% of respondents said this would cause them to take action by either saving more or moving money to another bank with higher rates.

Whatever the reason, there’s good news here for consumers: Savings accounts are starting to pay more, pros say. “Interest rates are rising and this is translating into better returns on savings accounts if you know where to look,” says Greg McBride, chief financial analyst at Bankrate. The biggest banks are flush with deposits and will be very slow to boost payouts, but the online banks and smaller local banks and credit unions that are already paying better returns are raising rates and poised to continue doing so, says McBride. (You can see the highest rates you can get on a savings account here.)

Indeed, Ken Tumin, founder of DepositAccounts.com, notes that brick-and-mortar banks were averaging 0.07% rates on their savings accounts, while online banks were at 0.54%. In April, digital bank Varo Bank launched a 5% savings rate; that said, the balance in this savings account must not exceed $5,000 at the close of each business day during a calendar month, in order to earn the 5% interest. Other good bets: LendingClub currently offers 1.05% with a $0 minimum balance, Marcus by Goldman Sachs offers 0.85% with a $0 minimum balance, and SoFi offers 1.25% with a $0 minimum balance and up to a $300 bonus with direct deposit.

How much should you have in savings, and how can you save more money?

Mamie Wheaton, financial planner with LearnLux, says the amount of savings someone has will depend on their individual goals. “Everyone is different but 3-6 months of expenses set aside in cash should be sufficient for most. If you’re self employed, a good rule of thumb is to set nine months of expenses aside,” says Wheaton.

Between retirement, emergences and other financial goals, McBride says you should aim to save 10% to 15% of your income. “Fund retirement savings and emergency savings at the same time, don’t wait to start saving for retirement until you’re comfortable with your emergency savings because you’ll miss out on valuable compounding in the years you wait,” says McBride. That said, the ideal emergency fund should be enough to cover six months’ of expenses, he adds: “But this is a destination, not a starting point. The important step is to be regularly contributing to your savings to more than offset what is withdrawn for unplanned expenses,” says McBride.

As for ways to boost your savings, signing up for direct deposit from your paycheck into a dedicated savings account, or scheduling an automatic monthly transfer from your checking account to your savings account are both ways to successfully save while building good saving habits. Something else you can do? “ Cut unused subscriptions and use the money to build your savings and open an online savings account to earn more interest,” says Tumin. As with many financial products, you’ll want to shop around for the best interest rates on savings accounts and consider moving your cash to a new account that offers a higher return, says Chanelle Bessette, banking specialist at Nerdwallet.

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