What Fed Rate Increases in 2023 mean for savings Accounts? Advertiser disclosure We’re your first priority. Every every time. We believe that every person should be able make financial decisions with confidence. Although our website does not contain every financial institution or product that is available We’re pleased that the advice we provide as well as the advice we provide and the tools we develop are objective, independent, straightforward — and completely free. How do we earn money? Our partners pay us. This could influence the types of products we review and write about (and the places they are featured on our website) However, it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners are not able to be paid to ensure positive ratings of their goods or services. . What Fed Rates increases in 2023 mean for Savings Accounts Rates for high-yield savings account in 2023 could continue to rise, but not as fast or as high as the previous year. Written by Margarette Burnette, Senior Writer Savings accounts as well as money market accounts banks Margarette Burnette is a specialist in saving and has written about bank accounts since prior to the Great Recession. Her work has been published in major newspapers. Prior to being a member of NerdWallet, Margarette was a freelance journalist who had bylines in magazines like Good Housekeeping, and Parenting. She is based close to Atlanta, Georgia. Feb 2, 2023 Edited by Yuliya Goldshteyn Assistant Assigning Bank Yuliya Goldshteyn is a banking editor with NerdWallet. She previously worked as editor, writer and research analyst in various industries that range from health care as well as market research. She graduated with a bachelor’s degree in the field of history from Berkeley at the University of California, Berkeley and a master’s in sociology from the University of Chicago. She can be reached via
. A majority or all of the products we feature are made by our partners who compensate us. This influences which products we feature and where and how the product appears on the page. However, this does not affect our assessments. Our opinions are our own. Here’s a list and . It’s 2023 and there’s a new Federal Reserve rate. Federal Reserve just announced a Federal funds rate increase of 0.25 percent. This is after seven rate increases in 2022. This raises the target rate range up to 4.5%-4.75%. This is less than some of the dramatic changes expected in 2022. However, an additional increase means that rates are at their highest point since 2007, when the rate last was 4.75 percent. All of the recent rate hikes result in loans and credit card balances are getting more costly. But if you have the option of a savings account or certificates of deposit you may benefit. Here’s a look at what the recent rate hike could have for savings accounts by 2023. Savings accounts with a 3% APY or more. In early 2022, some of the best savings accounts earned a mere 0.50% annual percent yield. Today, the top savings accounts , and some of the best high yield savings accounts, are paying 4percent APY. This is an impressive increase for one year. As the latest announcement reveals an increase that is smaller than the majority of 2022 rate hikes, don’t be expecting to see APYs nearly eight times higher. But, you could find yields that are upwards and more accounts may reach the 4% figure. Keep an eye out for high-yielding savings accounts on the internet specifically, as they tend to offer some of the highest rates. On the other hand, savings accounts in a few of the largest national banks are charged 0.01%, in spite of the several federal fund rate increases last year. They are not as high as the national average savings rate, which is 0.33% on January 17, 2023, according to the Federal Deposit Insurance Corp. If you have an account for savings that has low rates, it could be worth your effort to shop around for a savings account which earns 3% to 4% APY. Save to save for the future. One of the main reasons why that the Federal Reserve has been increasing rates is to tackle 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 often used as a measure of inflation, increased 6.5 percent year-over-year during the month of December. That figure, while relatively higher than previous years, is lower than what it was in the earlier summer in the summer of 2022, in which it was reported that the CPI was 9.1% year over year in June 2022. If inflation is within the Federal Reserve target range in the coming months, rate increases could come to an come to an end. This is a good reason to invest savings account with a high yield now. Nobody can anticipate the future, but having a strong savings account can prepare you for financial storm. It’s recommended to have 3 to 6 months’ worth of your expenses in savings however that’s quite a bit. Even if you’re not having as amount of money saved up, you can build it up over time in the amounts that work for you. Imagine you receive a check twice per month and you are able to save the equivalent of $50 every payday. You’ll have over 600 dollars saved in six months. This can help in a financial emergency. Putting that cash in an account with a high rate could help you build your savings. The difference a high-yield savings account makes Where you save your money can have an effect on the balance. If you place your emergency fund of $600 into a savings account that pays 0.01% APY like that is offered by several of the nation’s largest banks, and you didn’t make any additional deposits, it’s worth a total of only 6 cents after a year. If that money were placed in a high yield savings account with a 4.00% APY even if you did not make any additional deposits and the balance would increase to more than $24 over the same time frame. It’s a huge gain just by picking a more efficient savings account. You can try your own calculations using NerdWallet’s calculators to see what your savings might yield. Fed rate increases will continue into 2023 — so far. You can take advantage of this by storing your money in a savings account with a high yield. You’ll earn higher rates than you would with a normal savings account, and you will be more prepared for whatever financial situations occur. The author’s bio: Margarette Burnette is an account savings expert at NerdWallet. Her work has been highlighted in USA Today and The Associated Press. In a similar vein… Benefit from better rates As rates rise, see our picks for the best high-yield saving accounts online. Explore even more deeply in Banking . 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