Savings Interest Rate Forecast | Banking Advice


Higher interest rates mean borrowing becomes more expensive. But on the flip side, your savings account can earn more. Interest rates have increased throughout 2023 and aren’t likely to come down until 2024. See what that means for your savings account and learn how you can capitalize on a high interest rate.

What Savings Interest Rates Have Done in 2023

We’ve only seen savings rates go up in 2023. The Federal Reserve has increased interest rates to fight rising inflation since March 2022, with four rate hikes so far this year. We came into 2023 with a 4.25% to 4.5% federal funds rate. The current interest rate range is 5.25% to 5.5%.

As the Federal Reserve increases interest rates, the rates for mortgages, personal loans, credit cards and savings accounts increase. The Federal Deposit Insurance Corporation’s current savings rate across all financial institutions is 0.45% as of Sept. 18. That’s a sharp increase from its 0.17% national deposit rate in September 2022.

“The Federal Reserve, as part of the central bank’s responsibility to fight off inflation, has raised interest rates at a fast pace over the last year,” says Deri Freeman, a certified financial planner with Prudential. “While it does make it more expensive to borrow money for large purchases such as a home or a car, we see the benefit come through in interest savings rates for cash.”

What to Expect From Savings Rates 

At its September meeting, the Federal reserve chose to hold rates steady, but signaled that it aims to institute another rate hike before the end of 2023 to bring inflation down to its 2% goal. That could increase savings rates to around 6%.

“The Federal Reserve meeting minutes suggest another hike in 2023 is possible and no mention of lowering rates in the near future,” says money coach and certified financial planner Ohan Kayikchyan.

Freeman says it’s possible we may receive one more rate hike by the Fed toward the end of the year, and then rates will likely plateau next year. “Rates could begin to drop slowly at some point next year but it’s anyone’s guess,” she says.

Strategies for Maximizing Savings Rates

You can earn more from your savings account when interest rates are high. It’s a good time to take advantage by finding savings accounts and certificates of deposit with the highest annual percentage yields.

To get the maximum APY, look for high-yield savings accounts offered by digital banks, says Kayikchyan. These companies don’t have the substantial overhead costs of traditional brick-and-mortar banks so they can offer more competitive interest rates.

However, be sure to read the fine print on savings rates. Bonus rates, also known as introductory or teaser rates, are often an incentive to open a new account but may reset after a certain period. Also, find out if there’s a balance requirement to get the advertised rate.

But before you open a new account, turn to your current bank. If you have money in a savings account you’re thinking about moving to a bank with a higher savings rate, talk to your bank. “Ask your current bank what they can do for you to keep your relationship and not move your money to a competitor,” says Kayikchyan.

Freeman also recommends checking with credit unions that have high-yield savings rates. Like online banks, credit unions often have lower overhead than larger financial institutions and may be able to offer more competitive rates.

Another option is putting money in CDs, which generally offer higher interest rates than savings accounts. CDs also allow you to lock in an interest rate, so it will stay the same even if market rates drop.

But there’s a trade-off in flexibility because a CD requires you to leave the money in the account for the full term. For example, you’ll need to leave money in your account for a year if you open a one-year CD.

One option is to build a CD ladder by staggering maturity dates. A simple CD ladder might involve opening a one-year CD every month for a year. That can help you take advantage of high savings rates now and potentially rising rates in the near future while still maintaining access to your funds as the CDs mature.

Also watch for bank account bonuses, which can pay hundreds of dollars when you open new eligible savings accounts. You’ll need to keep the account open, make a qualifying deposit and maintain a minimum balance for a specified period to earn the bonus.

Best Savings Account Interest Rates


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