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What Fed Rate Increases in 2023 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 could continue to increase, though not as fast or as high as in the previous year.
By Margarette Burnette Savings accounts as well as money market accounts bank accounts Margarette Burnette is an specialist in saving and has been writing about bank accounts since prior to even the Great Recession. Her writing has been featured in , and other major newspapers. Prior to joining 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
Written by Yuliya Goldshteyn, Assistant Assigning Editor Yuliya Goldshteyn works as a banking editor with NerdWallet. She has previously worked as an editor, researcher and writer across a range of industries from healthcare as well as market research. She earned a bachelor's degree 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 at Portland, Oregon.
A majority of the products featured here come from our partners, who pay us. This impacts the types of products we feature as well as the place and way the product is displayed on the page. However, this does not affect our assessments. Our opinions are our own. Here's a list and .
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 is after seven rate increases in 2022. The new rate, which is a range that ranges from 4.75% to 5 percent. This increase is smaller than some of the dramatic changes in 2022, but the increase also means that rates are at their highest since 2006.
All of the recent rate hikes mean that loans or credit card accounts have become more expensive. But if you have an account for savings or a certificate of deposit, you might gain. Here's a look at what the most recent rate hike might mean for savings accounts in 2023.
Savings rates in 2023: 4% APY or higher
In the beginning of 2022, a few of the top savings accounts earned a mere 0.50 percent annual percent yield. Today, the best savings accounts and .
It's an impressive jump for one year. As the latest federal funds rate increase from the previous year isn't as big as most of the 2022 rate bumps and you shouldn't anticipate to see yields almost 8 times more. But, you could find yields that are slightly higher, and include more accounts that exceed the 4% mark.
Pay attention to high-yield online savings accounts in particular, which tend to provide some of the best rates.
On the other hand there are savings accounts at few of the largest national banks have rates that are 0.01%, in spite of the multiple federal fund rate increases last year. The rates are lower than the average national savings rate, which is 0.37% at the time of writing on March 20 20, 2023, as per the Federal Deposit Insurance Corp.
If you have a savings or checking account with a poor rate, it might be worthwhile to shop around for savings accounts that pay an APY of 3% to 4.
Shore up savings for the future
One of the main reasons why the Federal Reserve has been increasing rates is due to its desire to fight inflation. Based on the U.S. Bureau of Labor Statistics the consumer price index that is commonly used to measure inflation, increased 6.0 percent year-over-year during February of 2023. The figure, although excessive compared to the previous years, is less than the figure in June 2022 when the CPI was 9.1 percent higher year on year.
It's a great reason to invest in a high yield savings account today. There is no way to predict the future however having a solid savings account can help prepare you for financial storm.
It's ideal to have 3 to 6 months' worth of your expenditures in savings however that's quite a bit. If you don't have as amount of money saved up You can increase it in amounts that are feasible for you.
Imagine you receive a check every two weeks and can save $50 per payday. There will be more than 600 dollars saved in six months. That can help in a financial crisis. Putting that cash in an account with a high rate could help you build your savings.
The difference a high-yielding savings account brings
Where you save your money will affect your balance. If you placed your emergency funds of $600 in a bank account that earns a 0.01 percent APY, similar to those provided by some of the nation's largest banks, and did not make any other deposits, it's worth a total of only 6 cents in the course of one year. But if that money was stored in a savings account with a high yield that earns a 4.00 percent annual percentage rate even if you did not make any additional deposits, the balance would grow in excess of $24 over that same time period. It's a profit for choosing a more efficient savings account.
Check out how APYs have changed at high-yield accounts versus 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 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 do your own calculations with NerdWallet's to see what your savings could yield.
Fed rate hikes are expected to continue into 2023 -- to date. Take advantage by storing your cash in a high yield savings account. You'll earn higher rates than you would with a normal savings account, and are better prepared for whatever financial situations you face.
About the author: Margarette Burnette is a savings account specialist at NerdWallet. The work she has done was featured on USA Today and The Associated Press.
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