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What will Fed Rate increases in 2023 will mean for Savings Accounts
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What does a Fed Rate increase in 2023 Mean for Savings Accounts
Interest rates for high-yield savings accounts in 2023 may continue to increase, though not as fast or as much as the previous year.
By Margarette Burnette Savings accounts as well as money market accounts bank accounts Margarette Burnette has been a specialist in saving and has written about bank accounts since before the Great Recession. Her work has been featured in , and other major newspapers. Before becoming a part of NerdWallet, Margarette was a freelance journalist, with articles in magazines such as Good Housekeeping, and Parenting. Margarette is located in Atlanta, Georgia.
Updated Mar 22 2023
Editor: Yuliya Goldshteyn, Assistant Assigning Editor Yuliya Goldshteyn is a bank editor at NerdWallet. She has previously worked as an editor, a researcher, and a writer in industries ranging from health care as well as market research. She earned a bachelor's degree in the field of history at the University of California, Berkeley and a master's degree of social science from the University of Chicago, with an emphasis on Soviet culture and history. She is located at Portland, Oregon.
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It's 2023 and it's 2023 and the Federal Reserve just announced its second Federal Funds Rate range hike of 0.25 percent. This is after seven rate increases in 2022. The new rate, which is a range of 4.75 percent to 5%. This increase is smaller than some of the dramatic changes that will take place in 2022. However, an additional increase is that rates have reached their highest levels since 2006.
The recent rate hikes mean loans and credit card balances are becoming more expensive. But if you have the option of a savings account or certificate of deposit, you could profit. Here's a look at what the latest rate increase could be for savings accounts in 2023.
Savings rates in 2023: 4APY or more
In the early 2022 years, some of the top savings accounts had a 0.50% annual percent yield. The best savings accounts also .
This is a significant increase for one year. Because the most recent federal funds rate increase the previous year isn't as big as the majority of 2022 rate increases and you shouldn't anticipate to see APYs almost Eight times as high. However, you might notice yields that are slightly higher, and include some accounts that are close to the 4% mark.
Pay attention to high-yielding online savings accounts particularly, as they tend to provide some of the most lucrative rates.
However there are savings accounts at small number of the nation's largest banks have rates that are 0.01%, despite the numerous federal fund rate hikes last year. These rates lag behind the average national savings rate, which was 0.37 percent as of March 20 in 2023. This is according to the Federal Deposit Insurance Corp.
If you own a savings account with a poor rate, it might be worth your effort to look for an account that pays 3%-4% APY.
Save money for the future
One of the reasons the Federal Reserve has been increasing rates is that it wants to tackle inflation. According to the U.S. Bureau of Labor Statistics, the consumer price index that is commonly used as a measure of inflation, increased 6.0 percent year-over-year during February of 2023. The figure, although higher than prior years, is still lower than what it was 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-yielding account right now. No one can predict the future however having a solid savings account can prepare for a financial storm.
It's ideal to have three to six months of expenses saved up however that's quite a bit. Even if you're not having that amount of money saved up You can accumulate it over time in amounts that work for you.
Imagine you receive a check every two weeks and are able to put away $50 per payday. You'll have more than $600 saved up within six months. That could be a great help in an financial crisis. Incorporating that cash into an account that has a high rate can help you grow your funds.
The difference a high-yield savings account can make
Where you keep your savings will affect the balance. If you put your emergency fund of $600 in a bank account that earns an 0.01 percent APY similar to that offered by many of the largest national banks, and didn't make any other deposits, it would earn an average of just 6 cents in the course of one year. However, if the money was in a high-yield savings account with a 4.00 percent APY, even if you didn't deposit any more money and the balance would grow by more than $24 over the same time frame. That's a gain for simply selecting a savings account that is more beneficial.
See how APYs have moved in high-yield accounts as opposed to traditional 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 do your own calculations with NerdWallet's calculator to see what savings can earn.
Fed rate increases will continue into 2023 -- until now. You can take advantage of this by putting your money in a high-yield savings account. You'll earn better rates than with a regular savings account, and can be better prepared for whatever financial situations occur.
Author bios: Margarette Burnette is a savings account specialist at NerdWallet. Her work has been highlighted by USA Today and The Associated Press.
In a similar vein...
Benefit from better rates
With rates rising, take a look at our recommendations for the top high-yielding savings accounts online.
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