To combat inflation, the Federal Reserve has been continuously hiking interest rates in an attempt to drive spending down as consumers realize higher commercial interest rates on mortgages, credit card APRs and other loans. There is a silver lining, however — as the federal funds rate increases, interest rates on high-yield savings accounts and CDs typically do too. Offering a high APY (annual percentage yield) on accounts is an effective way for banks to compete for customers and attract deposits.
At their latest meeting, the Federal Reserve decided to once again keep the federal funds rate steady. This second consecutive pause in rate hikes means the Federal funds rate will remain at a target range of 5.25% to 5.5%, the highest it’s been in 22 years. However, the Fed did signal that another rate hike is possible before the year is through, as inflation has not reached it's 2% target.
In an official statement, The Federal Reserve stated: "The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."
Another rate hike is possible before the year is through, which could push savings rates slightly higher. Therefore, some experts recommend taking advantage of the best APYs before they go down. However, as inflation cools further and the Fed puts an end to raising rates, savings rates will likely level off and then decrease.
Our new comparison tool — in partnership with Bankrate — will help you find the best rates available now.
How to find the best savings rates
Compare high yield rates online: Online banks typically offer more generous APYs on savings accounts, so banking online could help you get the best savings rate possible. So, changing from your traditional savings account at a brick-and-mortar bank to an online one might be a good option.
Avoid teaser rates and tiered interest rates: Teaser rates are promotional rates banks use to attract new customers, but these rates are typically short-lived. Tiered interest rates pay a different yield based on the balance in your account, but if you plan on using your savings at some point, opting for an account with a flat APY is likely a better choice.
Take into account any fees: While high-yield savings accounts do offer higher than average APY on deposits, some have strings attached. Some high-yield accounts will have fees or balance requirements that could potentially decrease their overall value, so it's important to consider this to find the best options.
Here are some of the best earning high-yield accounts.
Greenwood Credit Union: 5.25% APY; $1 minimum opening deposit; No monthly fee
UFB Direct: 5.25% APY; $0 minimum opening deposit; No monthly fee
Popular Direct: 5.40% APY; $100 minimum opening deposit; No monthly fee
BluPeak Credit Union: 5.33% APY; $25 minimum opening deposit; No fee with a balance of $200; otherwise $5
CIT Bank: 5.05% APY; $100 minimum opening deposit; No monthly fee
Synchrony: 4.75% APY; $0 minimum opening deposit; No monthly fee
Citizens: 4.50% APY; $0.01 minimum opening deposit; No monthly fee
Related Content
-
-
Fed Stands Pat on Interest Rates: What the Experts Are Saying
Federal Reserve The Fed elected to go with a "hawkish pause" on interest rates for a second straight meeting.
-
The Fed Skips Interest Rate Hike, Again
The Federal Reserve kept its federal funds rate unchanged at a 22-year high of 5.25% to 5.5%.
-
The Fed Holds Interest Rates Steady
The Fed cautions that inflation remains high and it is prepared to adjust its monetary policy ‘as appropriate if risks emerge.’
-
5 Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Rates are high this year, but you can still find an affordable loan.
-
Banks Lost Billions on Bad Loans Last Quarter: Kiplinger Economic Forecasts
Economic Forecasts Bank deposits are also down, and more people are tapping into their savings.
-
Bond Yields Highest Since 2008
The yield on the 10-year Treasury increased 1.6 basis points to reach 4.258% on Wednesday afternoon, up from 4.22% on Tuesday. This is the highest level it had been since June 13, 2008.
-
What Is the Federal Funds Rate?
The federal funds rate can impact a host of borrowing costs, and thus the entire U.S. economy. Here, we take a closer look at this key metric.
-
Is It Prime Time for Money Market Funds?
The Fed's interest rate hike could be a boon for savings accounts. Here's why.
-
What the Fed's Rate Pause Means for Savings
At the latest policy-setting meeting, the Fed held interest rates steady. Here's what that means for savings rates.
-
Mortgage Rates and Payments Keep Rising, Creating Market Misery
Mortgages Current mortgage rates and payments continue to rise resulting in buyer demand stalling and housing sentiment at low levels.
