Just 22% of savers are earning 3% or more on their cash. Here’s how to find better interest rates

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Over the last 15 years or so, the interest rates you could earn on your cash were very low.

And while the Federal Reserve has changed that with a recent series of interest rate hikes aimed at combating high inflation, many savers still do not know they could be earning more on their cash.

“So few people are earning competitive returns on their savings, despite an environment of very compelling returns,” said Greg McBride, chief financial analyst at Bankrate.

As more accounts provide 4%, 4.5% or even 5% interest and still rising, it’s surprising more dollars are not migrating to those returns, he said.

Just 22% of savers are earning interest of 3% or more on their accounts, according to a recent Bankrate survey. (The online report was conducted between late February and early March and included 3,674 adults.)

That includes 7% who are receiving interest rates of 4% or more.

Most savers are earning far less, with 24% of respondents earning between 1% to 2.99%, and another 24% earning less than 1%.

Some savers — 16% — are not earning any interest at all, while 14% said they don’t know if they are earning any returns on their cash.

The Federal Reserve just hiked rates by a quarter percentage point again, and could continue raising rates this year, as long as economic financial stability keeps up, McBride said.

One key reason why rates will still go up — inflation is still around 6% and not going down as fast as many had hoped, McBride said.

Yet regardless of what happens — whether interest rates go up or inflation goes down — both are a win for savers, McBride said.

What’s more, a possible recession on the horizon means it’s more crucial to have cash set aside and to be earning competitive interest on those balances, personal finance expert Suze Orman recently told CNBC.com.

“An emergency savings account is vital, absolutely vital,” Orman said.

Those who will be most vulnerable in a downturn are those who have no savings set aside, she said.

Experts generally recommend having savings that can cover three to six months of expenses in an easily accessible account.

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“It’s the first line of defense of recovering from a job loss and finding employment again,” Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York City, recently told CNBC.com.

The good news is there are steps you can take now to make sure your cash is poised to benefit from higher interest rates.

Most people are not earning competitive rates on their cash either because they have left it in the same account for years or they simply do not have savings set aside, McBride said. While many people spend hours a day online, they are failing to look for better places to park their cash, he said.

“Take 15 minutes and open an online account,” McBride said.

There are high-yielding, nationally available, federally insured accounts available that require no minimum deposit or no online balance, he noted.

“That is literally available to anyone,” McBride said.

You may not want to limit your search to online savings accounts if it’s nonemergency money. Certificates of deposit, or CDs, Series I bonds, Treasurys and money market funds are also offering competitive returns for your cash.

Even after you’ve found a place for your cash, be sure to keep tabs on it.

“It’s worth checking back and seeing if your bank is still among the most competitive,” McBride said.

You may be able to find a better deal elsewhere for your cash as banks jockey to provide the most competitive rates. If you’re not paying attention, you may miss out, McBride said.

Recent bank woes have put a spotlight on having Federal Deposit Insurance Corp. coverage.

And there’s good reason for that. No depositor has lost any insured funds due to a financial institution’s failure since the FDIC was established in the 1930s.

Generally, the agency covers up to $250,000 per depositor, per bank, per ownership category.

So it’s wise to make sure your balances are covered. Look for the FDIC logo in your bank’s lobby and on their website.

The FDIC also offers an online calculator to help gauge your deposit insurance.

If your deposits are with a credit union, they may qualify for insurance under the National Credit Union Association, which also offers an online tool for consumers to evaluate their deposit risks.