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What does a Fed Rate increase in 2023 will 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 in 2023 could continue to increase, though not as fast or as high as in the year before.
By Margarette Burnette Senior Writer Savings accounts as well as money market accounts banks Margarette Burnette has been a savings expert who has written about bank accounts from before even the Great Recession. Her writing has been featured in major newspapers. Prior to being a member of NerdWallet, Margarette was a freelance journalist, with articles in magazines such as Good Housekeeping, and Parenting. Margarette is located near Atlanta, Georgia.
Updated Mar 22, 2023
Written by Yuliya Goldshteyn Assistant Assigning Editor Yuliya Goldshteyn is a bank editor with NerdWallet. She previously worked as an editor, researcher, and a writer across a range of industries from health care as well as market research. She earned a bachelor's degree in history from the University of California, Berkeley and a master's in sociology from University of Chicago, with the focus on Soviet culture and history. She lives within Portland, Oregon.
The majority or all of the products we feature are provided by our partners, who we pay. This affects the products we feature and where and how the product is featured on the page. However, it does not affect our assessments. Our opinions are entirely our own. Here is a list of 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 hikes in 2022. The new target that is a range of 4.75% to 5 percent. This is less than some of the dramatic changes expected in 2022, however the increase also means that rates have reached their highest levels since 2006.
The recent rate increases mean loans as well as credit card debt are more costly. But if you have an account for savings or a certificate of deposit, you could profit. This is a look at the implications of the most recent rate hike could mean for savings accounts in 2023.
Rates of savings in 2023: 4APY or more
In the early 2022 years, some of the top savings accounts had a 0.50% annual percentage yield. The best savings accounts are .
It's an impressive jump for just one year. Because the most recent federal funds rate increase the is smaller compared to most of the 2022 rate increases, don't expect to see APYs that are almost Eight times as high. But, you could see yields that edge slightly higher, and include more accounts that exceed the 4% mark.
Pay attention to high-yield online savings accounts specifically, which are likely to have the highest rates.
On the other hand the savings accounts of a handful of the biggest national banks have rates of 0.01 percent, despite numerous federal fund rate hikes last year. The rates are lower than the average national savings rate, which is 0.37 percent in March 20th 20, 2023, as per the Federal Deposit Insurance Corp.
If you own a savings account with a poor rate, it could be worthwhile to look for savings accounts that pay 3%-4% APY.
Savings are reinvested into the future
One of the main reasons why the Federal Reserve has been increasing rates is that it wants to combat inflation. According to the U.S. Bureau of Labor Statistics, the consumer price index, which is often used as a measure of inflation, increased 6.0% year over year in February 2023. That figure, while relatively higher than prior years, is still lower than it was in June 2022, when CPI was 9.1 percent higher year on year.
It's a great reason to invest in a high-yielding account right now. Nobody can foretell the future however having a solid savings account can prepare for a financial storm.
It's ideal to have three to six months of expenditures in savings However, that's a significant amount. If you don't have that amount of money saved up, you can accumulate it over time in amounts that work for you.
Imagine you receive a check twice per month and you have the ability to save $50 each payday. You'll have over 600 dollars saved in six months, and that can help in a financial emergency. Placing that money in an account with a higher rate could help you build your savings.
The difference that a high yield savings account can make
Where you keep your savings could affect your balance. If you put your emergency fund of $600 in an account with a 0.01 percent APY similar to that is offered by a number of the largest national banks, and you didn't make any additional deposits, it's worth the sum of 6 cents after a year. If that money were in a high-yield savings account that earns a 4.00 percent annual percentage rate even if you didn't make any further deposits and the balance would grow by more than $24 during the same time. This is a huge benefit for choosing a more efficient savings account.
Learn how APYs are changing in high-yield accounts as opposed 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 using NerdWallet's to see what your savings could earn.
Fed rate increases will 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 better rates than with a regular savings account and are better equipped for whatever financial challenges come your way.
Author bios: Margarette Burnette is a savings account expert at NerdWallet. She has had her work highlighted in USA Today and The Associated Press.
On a similar note...
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