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Here's why the interest rate on your high-yield savings account goes up and down

Has the APY on your high-yield savings account recently gone down? Here's why this happens so you can decide if a savings account is still smart for your money.

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Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.

If you opened an online savings account because it had a high interest rate, you may have noticed recently that the rate has dropped some.

A savings account's annual percentage yield, or APY, determines the amount of interest you earn in a year. This is an important number to look at when choosing a high-yield savings account. The higher the account's APY, the faster your savings will grow. Yet the percentage is always fluctuating.

The APY on a savings account is variable. This means that an account's APY can go up when the economy is doing well and the Federal Reserve raises interest rates, and it can likewise drop when the economy weakens and the Fed lowers interest rates.

Below, CNBC Select explains in-depth why your APY changes and what that means when you're deciding whether to put your money into a high-yield savings account.

Why your APY goes up and down

Though it's important to consider the APY when choosing a high-yield savings account, the rate you sign up for is not guaranteed forever. In fact, APYs are subject to change without notice, as they often fluctuate in accordance with the Fed rate.

When the economy is facing a downturn, the Fed will sometimes lower interest rates to make it cheaper for consumers to borrow or invest their money. This encourages people to take out loans and spend more money, which, in theory, stimulates the economy. Large transactions, such as buying a home or taking out a business loan, become more affordable because interest rates are lower. Consumers will be more willing to spend and ultimately cash will flow back into the economy.

While lowering interest rates is good for borrowers, it's not so good for savers. Banks also use the Fed rate as a benchmark for savings account yields. When the Fed rate decreases, the interest rate on your high-yield savings account will also likely decrease.

You can look at the current market conditions as an example: In March, the Fed made two emergency rate cuts in response to the economic uncertainty surrounding the coronavirus pandemic. Many banks reacted by cutting the rates they offer to their customers, and many people with a high-yield savings account saw their interest rate drop.

For example, the Marcus by Goldman Sachs High Yield Online Savings was offering 1.50% APY at the end of April, but it has since dropped to 1.30%. A decrease like this one doesn't drastically change how much you'll earn in interest, though. If you have $1,000 in your savings, that's only a difference of $2 a year.

But when the economy is booming, the opposite happens. That's why, in the long run, a high-yield savings account is a good idea no matter what. The Fed will often raise interest rates in a strong market to stabilize borrowing and spending, which makes credit more expensive but gives savings accounts an added edge. Banks often increase savings yields in a strong market, giving you a more lucrative place to stash your money.

Why you should still consider a high-yield savings account

Even while banks can lower or raise APYs, a high-yield savings account is still a good place to put your money.

The national average APY on regular savings accounts is just 0.06%, according to the Federal Deposit Insurance Corporation (FDIC). That's over 20 times less than what the highest-yield savings accounts currently offer, even with today's lower Fed rates.

If you're looking to save your money, you may want to consider some of CNBC Select's best high-yield savings accounts.

Here are our top five:

With one of these five high-yield savings accounts, you can rest assured that your money is growing over time, even as your interest rate continues to flux.

Information about the Marcus by Goldman Sachs High Yield Online Savings has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Goldman Sachs Bank USA is a Member FDIC.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.