Will Savings Rates Keep Going Up in 2024?
As the Federal Reserve has paused its rate-hiking campaign, savings rates have started to slip. Consider locking in rates while they're still high.
As the Federal Reserve hiked interest rates through 2022-2023, rates on high-yield savings accounts and CDs rose in tandem. But since the Federal Reserve began holding interest rates steady (which it did at a fifth consecutive meeting in March), savings rates have started to fall. If the Fed cuts interest rates later this year, as expected, savings rates will likely drop even further. As rates continue to go down, consider locking in rates while they're still high.
To combat inflation, the Federal Reserve hiked interest rates in an attempt to drive spending down, as consumers realized higher commercial interest rates on mortgages, credit card APRs and other loans. There was a silver lining, however — as the federal funds rate increased, interest rates on high-yield savings accounts and CDs did too, as is typical. Offering a high APY (annual percentage yield) on accounts is an effective way for banks to compete for customers and attract deposits.
But at its latest meeting, the Federal Reserve decided to once again keep the federal funds rate steady. This fifth consecutive pause in rate hikes means the federal funds rate, a key bank lending rate, will remain at a target range of 5.25% to 5.5%, the highest it’s been in 23 years.
In the official statement, The Federal Reserve stated: "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."
However, the Federal Reserve maintains their projection that there will be three interest rate cuts in 2024, reducing the federal funds rate to a range of 4.5% to 4.75%.
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 high yield savings accounts.
Poppy Bank: 5.50% APY; $1,000 minimum opening deposit
My Banking Direct: 5.35% APY; $500 minimum opening deposit
Ivy Bank: 5.30% APY; $2,500 minimum opening deposit
TAB Bank: 5.27% APY; $0 minimum opening deposit
UFB Direct: 5.25% APY; $0 minimum opening deposit
Newtek Bank: 5.25% APY; $0 minimum opening deposit
Related Content
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
-
Stock Market Today: S&P 500, Nasdaq Extend Losing Streaks
The two indexes have closed lower for five straight sessions.
By Karee Venema Published
-
Save Over $40 on Audible With Amazon's Latest Deal
Amazon’s latest promotion lets you score three months of Audible for just $0.99 a month.
By Erin Bendig Published
-
More Signs of Belt-Tightening and a Slowing Economy: The Kiplinger Letter
The Kiplinger Letter Although fewer banks are tightening lending standards, more businesses and households are feeling the squeeze.
By Rodrigo Sermeño Published
-
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.’
By Esther D’Amico Published
-
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.
By Daniel Bortz Published
-
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.
By Rodrigo Sermeño Published
-
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.
By Erin Bendig Published
-
What Is the Federal Funds Rate?
The federal funds rate can impact a host of borrowing costs, and thus the entire U.S. economy.
By Jeff Reeves Last updated
-
Is It Prime Time for Money Market Funds?
The Fed's interest rate hike could be a boon for savings accounts. Here's why.
By Seychelle Thomas Published
-
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.
By Erin Bendig Last updated