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What will Fed Rate increases in 2023 mean for savings Accounts
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What Fed Rate Increases in 2023 Mean for Savings Accounts
Interest rates 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 and money market accounts bank accounts Margarette Burnette is a savings expert who has written about bank accounts since before when the Great Recession. Her writing has been featured in major newspapers. Prior to being a member of NerdWallet, Margarette was a freelance journalist who had bylines in magazines such as Good Housekeeping, and Parenting. She is based close to Atlanta, Georgia.
Updated Mar 22 2023
Edited by Yuliya Goldshteyn Assistant Assigning Bank Yuliya Goldshteyn works as a banking editor with NerdWallet. She previously worked as an editor, researcher, and a writer across a range of industries from medical care and market research. She graduated with a bachelor's degree in history from the University of California, Berkeley and a master's degree in social sciences from the University of Chicago, with a focus on Soviet culture and history. She is located within Portland, Oregon.
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It's 2023, and the Federal Reserve just announced its second Federal Funds Rate range increase of 0.25%. It follows seven rate increases in 2022. The new target, which is a range of 4.75 percent to 5%. This is less than some of the steep changes in 2022, but the increase also means that rates are at their highest point since 2006.
The recent rate hikes mean that loans as well as credit card debt are becoming more costly. If you've got an account for savings or a certificate of deposit, you may gain. Let's take a look at what the most recent rate hike might have for savings accounts by 2023.
Savings rates in 2023: 4APY or more
In early 2022, 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. Since the most recent Federal funds rate hike from the is smaller compared to the majority of 2022 rate increases, don't expect to see APYs that are nearly 8 times more. But, you could notice yields that are slightly higher, with some accounts that are close to the 4% threshold.
Pay attention to high-yielding online savings accounts in particular, which tend to offer some of the best rates.
However there are savings accounts at handful of the biggest national banks are charged 0.01%, despite the multiple federal fund rate increases in the last year. These rates lag behind the national average savings rate, which was 0.37 percent at the time of writing on March 20, 2023, 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 shop around for a savings account that earns around 3%-4 APY.
Shore up savings for 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 CPI, which is the measure of consumer prices which is frequently used as a measure of inflation, increased 6.0 percent year-over-year in February 2023. The figure, although excessive compared to the previous years, is less than it was in June 2022 when the CPI was 9.1 percent higher year on year.
This is a good reason to invest in a high-yield account now. Nobody can foretell the future however having a solid savings account can allow you for financial storm.
It's best to have 3 to 6 months of expenses in savings, but that's a lot. Even if you're not having as much saved up just yet It's possible to build it up over time in amounts that work for you.
Say you receive a paycheck twice per month and you can save $50 per payday. There will be more than $600 saved up within six months. That can help in a financial emergency. Placing that money in an account that has a high rate could help you build your savings.
The difference that a high yield savings account can make
Where you save your money can have an effect on the amount you have. If you place your emergency savings of $600 in an account with a 0.01% APY like that provided by some of the biggest national banks, and you didn't make any further deposits, it would earn an average of just 6 cents after a year. However, if the money was placed in a high yield savings account with a 4.00 percent APY, even if you didn't make any additional deposits, the balance would grow in excess of $24 during the same time. That's a gain for simply choosing a better savings account.
Learn how APYs are changing 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 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 using NerdWallet's to see what your savings could earn.
Fed rate hikes are expected to continue until 2023 -- 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 whatever financial situations occur.
Author bios: Margarette Burnette is a savings account specialist at NerdWallet. She has had her work highlighted on USA Today and The Associated Press.
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