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What do Fed Rate Increases in 2023 Mean for Savings Accounts? Advertiser disclosure We’re your top priority. Each time. We believe that every person should be able to make financial decisions with confidence. And while our site doesn’t include every financial or company product that is available We’re pleased that the advice we provide and the information we offer as well as the tools we design are objective, independent easy to use and completely free. So how do we make money? Our partners pay us. This may influence which products we write about (and the places they are featured on the website), but it does not affect our suggestions or recommendations, which are grounded in many hours of research. Our partners do not promise us favorable ratings of their goods or services. . What will Fed Rates Increases in 2023 Mean for Savings Accounts Interest rates for high yield savings accounts in 2023 are likely to increase, though not as quickly or as much as the previous year. Written by Margarette Burnette Senior Writer Savings accounts and money market accounts banking Margarette Burnette is a savings specialist who has been writing about bank accounts since before even the Great Recession. Her work has been published in , and other major newspapers. Prior to becoming a part of NerdWallet, Margarette was a freelance journalist, with bylines appearing in magazines like Good Housekeeping, and Parenting. She is located near Atlanta, Georgia. Feb 2 2023, 2023 Edited by Yuliya Goldshteyn, Assistant Assigning Bank Yuliya Goldshteyn is a bank editor at NerdWallet. She was previously editor, writer and research analyst in industries ranging from health care and market research. She graduated with a bachelor’s degree in history from Berkeley at the University of California, Berkeley and a master’s of social science from University of Chicago. She can be reached via

. Many or all of the products we feature are made by our partners who compensate us. This impacts the types of products we feature and the location and manner in which the product is featured on a page. But, it doesn’t affect our opinions. Our views are our own. Here’s a list of and . It’s 2023, and there’s a new Federal Reserve rate. Federal Reserve just announced a Federal funds rate range rise of 0.25 percent. This follows seven rate increases in 2022. The increase has brought the target rate range up to 4.5%-4.75 percent. This is less than some of the dramatic changes expected in 2022. However, the rate is at their highest point since 2007, which was when the rate last reached 4.75 percent. The recent rate hikes mean loans or credit card debts have become getting more costly. But if you have a savings account or certificates of deposit you might profit. Let’s take a look at what the most recent rate hike could mean for savings accounts in 2023. Savings accounts with a 3% APY or higher In early 2022, a few of the best savings accounts earned just 0.50 percent annual percent yield. Today, the top savings accounts and a few of the top high-yield savings accounts are at 4percent annual percentage yield. This is a huge jump in one year. As the most recent announcement indicates less of an increase than the majority of 2022 rate increases, don’t anticipate to see yields nearly 8 times more. However, you may still find yields that are a little higher and more accounts could be able to reach the 4% mark. Pay attention to high-yield online savings accounts particularly, as they tend to offer some of the most lucrative rates. On the other hand, savings accounts at a handful of the biggest national banks are charged 0.01 percent, despite multiple federal fund rate increases in the last year. These rates are lower than the average national savings rate, which is 0.33 percent on January 17, 2023 according to the Federal Deposit Insurance Corp. If you’re a member of an account for savings that has an unsatisfactory rate It could be worthwhile to shop around for a savings account that earns 3%-4% APY. You can save for the future . One of the main reasons why that the Federal Reserve has been increasing rates is that it wants to tackle the rise in inflation. Its efforts from last year seem to be working. As per reports from the U.S. Bureau of Labor Statistics, the consumer price index, which is frequently used to gauge the rate of inflation, increased 6.5% year over year through December of 2022. The figure, although excessive compared to the previous years, is lower than the previous summer that year, in which CPI was 9.1%. CPI was 9.1 percent year-over-year in June 2022. If inflation stays within the Federal Reserve target range in the coming months, rate increases could come to an end. That’s a reason to invest savings account with a high yield now. There is no way to predict the future However, having a robust savings account can prepare you for financial storm. It’s best to have 3 to 6 months’ worth of your expenses saved up, but that’s a lot. In the event that you do not have as amount of money saved up it is possible to build it up over time in increments that work for you. Say you receive a paycheck every two weeks and can save the equivalent of $50 every payday. You’ll have more than 600 dollars in savings within six months, and that could be a great help in an financial emergency. Placing that money in an account that has a high rate can help you grow your savings. The difference that a high yield savings account makes Where you keep your savings can affect the balance. If you placed your emergency funds of $600 into an account that pays 0.01% APY like that provided by a number of the nation’s largest banks, and didn’t make any additional deposits, the account would earn the sum of 6 cents after a year. But if that money was stored in a savings account with a high yield with a 4.00 percent APY even if you didn’t make any further deposits the balance would increase to more than $24 during the same time frame. This is a profit for picking a more efficient savings account. You can do your own calculations with NerdWallet’s to see what your savings might be earning. Fed rate increases are continuing until 2023 — so far. Take advantage by storing your cash in a high-yield savings account. You’ll earn higher rates than a standard savings account and are better prepared for any financial challenges that occur. Author bio Margarette Burnette is an account savings expert at NerdWallet. She has had her work featured in USA Today and The Associated Press. On a similar note… Enjoy better rates when rates rise, see our picks for the best high-yielding online savings accounts. Dive even deeper in banking. Get smarter money-related moves delivered straight to your inbox Sign up and we’ll send you articles from Nerdy on money-related topics which matter to you the most as well as other methods to get the most out of your savings. Take all the appropriate money moves

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