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What will Fed Rate increases in 2023 Mean for Savings Accounts
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What will Fed Rate increases in 2023 Mean for Savings Accounts
The rates of interest for high yield savings accounts could continue to increase, though not as quickly or as high as in the previous year.
By Margarette Burnette, Senior Writer Savings accounts, money market accounts, banking Margarette Burnette is a specialist in saving and has written about bank accounts since prior to the Great Recession. Her work has been featured in the major newspapers. Before being a member of NerdWallet, Margarette was a freelance journalist, with articles in magazines like Good Housekeeping, and Parenting. She is based near Atlanta, Georgia.
Updated Mar 22 2023
Editor: Yuliya Goldshteyn, Assistant Assigning Editor Yuliya Goldshteyn is a banking editor at NerdWallet. She previously worked as an editor, a writer and a research analyst in industries ranging from healthcare as well as market research. She received a bachelor's diploma in history from the University of California, Berkeley and a master's degree in sociology from University of Chicago, with a focus on Soviet culture and history. She is located in Portland, Oregon.
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It's 2023 and the Federal Reserve just announced its second federal funds rate range hike of 0.25%. It follows seven rate hikes in 2022. The new target that is a range of 4.75% to 5%. This increase is smaller than some of the steep changes expected in 2022, however the increase also means that rates are at their highest since 2006.
The recent rate hikes mean that loans or credit card accounts are more costly. If you've got a savings account or certificates of deposit you may profit. Let's take a look at what the latest rate increase could have for savings accounts by 2023.
Savings rates in 2023: at least 4% APY
In early 2022, some of the top savings accounts had a 0.50 percent annual percentage yield. Today, the best savings accounts are .
It's an impressive jump in just one year. Since the most recent federal funds rate increase the previous year isn't as big as the majority of 2022 rate increases, don't expect to see APYs that are more than eight times higher. However, you may still find yields that are slightly higher, and include some accounts that are close to the 4% figure.
Pay attention to high-yielding online savings accounts in particular, which tend to have the most lucrative rates.
However the savings accounts of a handful of the biggest national banks are charged 0.01%, despite the several federal fund rate increases last year. They are not as high as the average national savings rate, which was 0.37 percent in March 20th 20, 2023, as per the Federal Deposit Insurance Corp.
If you have a savings account with a subpar rate, it might be worthwhile to look for a savings account that earns an APY of 3% to 4.
Save money for the future
One of the reasons that the Federal Reserve has been increasing rates is due to its desire to fight inflation. As per the U.S. Bureau of Labor Statistics, the consumer price index that is commonly used as a measure of inflation, rose 6.0 percent over the course of the year for February 20, 2023. The figure, although excessive compared to the previous years, is less than the figure in June 2022, when CPI was 9.1 percent higher year on year.
This is a good reason to build up an in a high yield savings account today. Nobody can foretell the future but having a robust savings account can prepare you for financial storm.
It's a good idea to have 3 to 6 months' worth of your expenses saved up However, that's a significant amount. In the event that you do not have as much saved up just yet It's possible to accumulate it over time in amounts that work for you.
Imagine you receive a check twice per month and you can save $50 every payday. You'll have more than 600 dollars in savings within six months. That could be a great help in an emergency situation. Incorporating that cash into an account that has a high rate will help you increase your savings.
The difference a high-yield savings account brings
Where you save your money can have an effect on the balance. If you put your emergency funds of $600 in an account with an 0.01 percent APY, similar to those offered by many of the nation's largest banks, and didn't make any additional deposits, the account would earn a total of only 6 cents over the course of a year. However, if the money was placed in a high yield savings account that earns a 4.00 percent APY even if you didn't make any further deposits, the balance would grow by more than $24 during the same time frame. It's a profit for choosing a better savings account.
Learn how APYs are changing on high yield accounts in comparison to normal 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 bank
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 to see what your savings could yield.
Fed rate hikes are expected to continue through 2023 -- at least to date. You can take advantage of this by putting your money in a high-yield savings account. You'll earn higher rates than you would with a normal savings account, and you will be more prepared for any financial situation that may come your way.
The author's bio: Margarette Burnette is a savings account specialist at NerdWallet. The work she has done was highlighted on USA Today and The Associated Press.
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