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What will Fed Rate increases in 2023 Mean for Savings Accounts
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What does a Fed Rate increase in 2023 will mean for Savings Accounts
Savings accounts with high yields are likely to have higher interest rates. accounts in 2023 could continue to increase, though not as fast or as high as in the previous year.
By Margarette Burnette Senior Writer Savings accounts, money market accounts, bank accounts Margarette Burnette is an specialist in saving and has written about bank accounts since prior to the Great Recession. Her work has been published in the major newspapers. Before joining NerdWallet, Margarette was a freelance journalist, with articles in magazines like Good Housekeeping, and Parenting. Margarette is located close to Atlanta, Georgia.
Updated Mar 22 2023
Edited by Yuliya Goldshteyn Assistant Assigning Bank Yuliya Goldshteyn is a banking editor at NerdWallet. She previously worked as an editor, a researcher and writer in a variety of industries, from health care and market research. She received a bachelor's diploma in history from the University of California, Berkeley as well as a master's degree in social sciences from the University of Chicago, with an emphasis on Soviet cultural history. She is based 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%. This is after seven rate hikes in 2022. The new goal that is a range that ranges from 4.75% to 5 percent. This increase is smaller than some of the dramatic changes that will take place in 2022. However, the increase also means that rates have reached their highest levels since 2006.
All of the recent rate hikes mean that loans and credit card balances have become more costly. But if you have a savings account or certificate of deposit, you might benefit. Here's a look at what the most recent rate hike might have for savings accounts by 2023.
Savings rates in 2023: at least 4% APY
In the beginning of 2022, a few of the top savings accounts only earned 0.50 percent annual percent yield. These days, the most effective savings accounts are .
This is a significant increase for just one year. Since the most recent federal funds rate increase from the previous year isn't as big as most of the 2022 rate bumps, don't expect to see APYs almost 8 times more. However, you may still find yields that are a little higher, including more accounts that reach the 4% figure.
Keep an eye out for high-yield online savings accounts specifically, which are likely to offer some of the best rates.
On the other hand, savings accounts in a few of the largest national banks have rates of 0.01%, despite the multiple federal fund rate increases last year. These rates lag behind the average national savings rate, which is 0.37 percent in March 20th in 2023. This is according to the Federal Deposit Insurance Corp.
If you have a savings account that has a low rate, it may be worth your effort to look for a savings account that earns 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 fight inflation. Based on the U.S. Bureau of Labor Statistics CPI, which is the measure of consumer prices that is commonly used to gauge inflation, increased 6.0 percent over the course of the year for February 20, 2023. The figure, although high compared to prior years, is still lower than what it was in June 2022, when CPI was 9.1 percent higher year over year.
This is a good reason to build up an in a high-yield account now. No one can predict the future but having a robust savings account can help prepare you for financial storm.
It's a good idea to have 3 to 6 months of your expenses in savings However, that's a significant amount. Even if you're not having that amount of money saved up You can build it up over time in amounts that are feasible for you.
If you get a pay check twice a month and have the ability to save $50 every payday. You'll have more than $600 saved up within six months, and that could be a great help in an emergency situation. Placing that money in an account that has a high rate could help you build your money.
The difference a high-yielding savings account can make
Where you save your money will affect the balance. If you put your emergency savings of $600 in an account that earns a 0.01 percent APY similar to that provided by some of the nation's largest banks, and didn't make any additional deposits, it's worth the sum of 6 cents after a year. But if that money was in a high-yield savings account with a 4.00 percent annual percentage rate even if you didn't make any additional deposits the balance would increase to more than $24 over the same time frame. That's a gain for simply choosing a better savings account.
Learn how APYs are changing 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 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 increases will continue until 2023 -- so far. You can take advantage of this by putting your cash in a high yield savings account. You'll earn better rates than with a regular savings account, and will be more equipped for whatever financial challenges you face.
About the author: Margarette Burnette is a savings account expert at NerdWallet. The work she has done was highlighted on USA Today and The Associated Press.
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