What Fed Rate Increases in 2023 mean for savings Accounts? Advertiser Disclosure You're our first priority. Each time. We believe that everyone should be able to make financial decisions without hesitation. While our website doesn't include every financial or company product available on the market We're pleased of the advice we offer as well as the advice we provide and the tools we develop are impartial, independent, straightforward -- and completely free. So how do we make money? Our partners pay us. This could influence the types of products we write about (and the places they are featured on our website) However, it doesn't affect our advice or suggestions, which are grounded in hundreds of hours of research. Our partners do not be paid to ensure positive ratings of their goods or services. . What Fed Rates increases in 2023 mean for Savings Savings accounts Interest rates for high-yield savings accounts in 2023 could continue to rise, although not as quickly or as high as the year before. By Margarette Burnette Senior Writer Savings accounts as well as money market accounts banks Margarette Burnette is a savings expert who has written about bank accounts from before even the Great Recession. Her writing has been featured in various major newspapers. Before being a member of NerdWallet, Margarette was a freelance journalist, with bylines appearing in magazines like Good Housekeeping, and Parenting. She is located close to Atlanta, Georgia. Feb 2 2023, 2023 Edited by Yuliya Goldshteyn Assistant Bank Yuliya Goldshteyn is a banking editor at NerdWallet. She was previously an editor, writer and research analyst in a variety of industries, ranging from health care and market research. She received a bachelor's level degree in history at Berkeley at the University of California, Berkeley and a master's in social sciences from the University of Chicago. She can be reached via
. Many or all of the products featured here are from our partners who compensate us. This influences which products we feature and where and how the product is featured on a page. But, it doesn't influence our evaluations. Our opinions are entirely our own. Here's a list and . It's 2023, and it's 2023 and the Federal Reserve just announced a federal funds rate range increase of 0.25%. This comes after seven rate increases in 2022. This increase brings the range of target funds rates up to 4.5%-4.75%. This is less than some of the dramatic changes expected in 2022. However, another increase means rates are at their highest since 2007, the last time that the target reached 4.75%. The recent rate increases result in loans as well as credit card accounts are becoming more expensive. If you've got a savings account or certificate of deposit, you could gain. This is a look at the what the latest rate increase could be for savings accounts in 2023. Savings accounts that earn 3% or higher In early 2022, some of the best savings accounts earned a mere 0.50% annual percent yield. Today, the top savings accounts and several of the most popular high yield savings accounts are earning 4.4% annual percentage yield. This is a huge jump in one year. Since the most recent announcement states an increase that is smaller than the majority of 2022 rate hikes, don't be expecting to see APYs that are more than 8 times more. However, you might get yields that seem slightly higher, and more accounts may reach the 4% figure. Pay attention to high-yield online savings accounts specifically, as they are likely to have the highest rates. On the other hand, savings accounts offered by a few of the nation's largest banks have rates that are 0.01 percent, despite multiple federal fund rate increases last year. They are not as high as the average national savings rate, which is 0.33% on January 17, 2023 as per the Federal Deposit Insurance Corp. If you've got your savings account that is earning an unsatisfactory rate, it could be worthwhile to shop for a savings plan that pays 3%-4% annual percentage. Save to save for the future. One of the main reasons why the Federal Reserve has been increasing rates is that it wants to combat the rise in inflation. Its efforts from last year seem to be paying off. According to The U.S. Bureau of Labor Statistics, the consumer price index (CPI), which is often used as a measure of inflation, grew 6.5% year over year in December 2022. That figure, while relatively high compared to previous years, is lower than it was earlier that summer, when it was reported that the CPI was 9.1% year over year in June 2022. If inflation is within that Federal Reserve target range in the next few months, the rate hikes may end. That's all the more reason to build up an in a high-yield account now. No one can predict the future, but having a strong savings account can help prepare you for financial storm. It's recommended to have three to six months' worth your expenses saved up, but that's a lot. In the event that you do not have that much in savings You can build it up over time , in the amounts that work for you. Say you receive a paycheck twice a month and are able to put away 50 dollars each payday. You'll have over 600 dollars saved in six months. This can help in a financial crisis. Putting that cash in an account that offers a higher rate could help you build your funds. The difference that a high yield savings account makes Where you store your savings could have an effect on your balance. If you put your emergency savings of $600 into an account that pays 0.01% APY similar to that provided by a number of the largest national banks, and did not make any other deposits, it would earn a total of only 6 cents in the course of one year. If that money were in a high-yield savings account with a 4.00% APY even if you didn't make any further deposits the balance would increase by more than $24 during that same time period. This is a profit for choosing a better savings account. You can do your own calculations using NerdWallet's calculator to see how much your savings could earn. Fed rate increases will continue through 2023- so far. You can take advantage of this by storing your money in a high-yield savings account. You'll earn higher rates than with a regular savings account, and can be better prepared for any financial situation that may come your way. The author's bio: Margarette Burnette is a savings account specialist at NerdWallet. Her work has been highlighted by USA Today and The Associated Press. On a similar note... Enjoy better rates when rates increase, take a look at our recommendations for the top high yield account for savings online. Get even deeper into Banking Get more smart money moves - straight to your inbox Sign up and we'll email you Nerdy posts on the topics in finance that are important to you and other strategies to get the most out of your savings. Take all the appropriate money moves

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