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What Fed Rate Increases in 2023 mean for savings Accounts
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What Fed Rate Increases in 2023 Mean for Savings Accounts
Interest rates for high-yield savings accounts could be expected to continue rising, although not as fast or as high as in the previous year.
By Margarette Burnette, Senior Writer Savings accounts and money market accounts banks Margarette Burnette is an savings expert who has written about bank accounts since before when the Great Recession. Her work has been published in the major newspapers. Prior to being a member of NerdWallet, Margarette was a freelance journalist with bylines in magazines like Good Housekeeping, and Parenting. She lives in Atlanta, Georgia.
Updated Mar 22 2023
Editor: Yuliya Goldshteyn, Assistant Assigning Banking Yuliya Goldshteyn works as a banking editor with NerdWallet. She previously worked as an editor, a researcher and writer in a variety of industries, from health care and market research. She earned a bachelor's degree in the field of history at the University of California, Berkeley as well as a master's degree of social science from the University of Chicago, with a focus on Soviet culture and history. She lives in Portland, Oregon.
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It's 2023 and there's a new Federal Reserve rate increase. Federal Reserve just announced its second federal funds rate range hike of 0.25 percent. This follows seven rate increases in 2022. The new target that is a range that ranges from 4.75% to 5%. This is less than the more dramatic changes in 2022, but the increase also means that rates have reached their highest levels since 2006.
The recent rate hikes mean that loans and credit card balances are more costly. If you've got the option of a savings account or Certificate of Deposit, then you may profit. Let's take a look at what the most recent rate hike could be for savings accounts in 2023.
Rates of savings in 2023: at least 4% APY
In early 2022, some of the best savings accounts earned a mere 0.50% annual percent yield. The best savings accounts and .
It's an impressive jump for just one year. As the latest federal funds rate increase the is smaller compared to most of the 2022 rate hikes and you shouldn't anticipate to see APYs that are nearly 8 times more. But, you could notice yields that are a little higher, including some accounts that are close to the 4% figure.
Be on the lookout for high-yielding savings accounts online particularly, as they tend to provide some of the best rates.
On the other hand, savings accounts in a few of the largest national banks have rates that are 0.01 percent, despite multiple federal fund rate increases last year. These rates lag behind the national average savings rate, which is 0.37% at the time of writing on March 20, 2023, according to the Federal Deposit Insurance Corp.
If you have a savings or checking account with a subpar rate, it might be worthwhile to search for an account that pays an APY of 3% to 4.
Shore up savings for the future
One of the reasons that the Federal Reserve has been increasing rates is due to its desire to fight inflation. According to the U.S. Bureau of Labor Statistics, the consumer price index that is commonly used as a measure of inflation, grew 6.0 percent over the course of the year during February of 2023. This figure, though excessive compared to the previous years, is lower than it was in June 2022, when CPI was 9.1% higher year over year.
It's a great reason to build up an in a high-yielding account right now. Nobody can foretell the future, but having a strong savings account can help prepare for a financial storm.
It's best to have 3 to 6 months' worth your expenses in savings However, that's a significant amount. In the event that you do not have as much saved up just yet It's possible to increase it in amounts that are feasible for you.
Say you receive a paycheck every two weeks and can save $50 per payday. You'll have over 600 dollars saved in six months. That can be helpful in the event of a financial emergency. Incorporating that cash into an account with a high rate will help you increase your money.
The difference a high-yielding savings account brings
The place you store your savings will affect the amount you have. If you placed your emergency savings of $600 into a savings account that earns a 0.01% APY like that offered by many of the biggest national banks, and you didn't make any additional deposits, it's worth the sum of 6 cents over the course of a year. If that money were stored in a savings account with a high yield with a 4.00 percent annual percentage rate even if you didn't deposit any more money and the balance would grow by more than $24 over the same time frame. It's a profit for choosing a better savings account.
See how APYs have moved on high yield accounts in comparison to regular accounts
March 2023
February 2023
January 2023
December 2022
November 2022
October 2022
September 2022
August 2022
Online institutions
Member FDIC.
3.40% APY.
3.40% APY.
3.30% APY.
3.30% APY.
3.00% APY.
2.35% APY.
1.85% APY.
1.85% APY.
Member FDIC.
4.05% APY.
4.05% APY.
4.05% APY.
3.85% APY.
3.60% APY.
3.00% APY.
2.10% APY.
2.10% APY.
, Member FDIC.
4.00% APY.
4.00% APY.
4.00% APY.
3.60% APY.
3.25% APY.
3.12% APY.
2.07% APY.
2.07% APY.
National brick-and-mortar banks
Member FDIC.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
Member FDIC.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
0.01% APY.
You can try your own calculations with NerdWallet's calculator to see what savings could earn.
Fed rate hikes are expected to continue through 2023 -- at least so far. Make the most of it by putting your funds in a high-yield savings account. You'll earn higher rates than with a regular savings account, and can be better prepared for any financial situation that may occur.
The author's bio: Margarette Burnette is a savings account specialist at NerdWallet. Her work has been highlighted by USA Today and The Associated Press.
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Benefit from better rates
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