Up To 5.30% – Forbes Advisor – Technologist

High-yield savings account rates were on a steady upward trend through 2022 and 2023. That’s largely due to the Federal Open Market Committee’s efforts to fight inflation by steadily increasing the federal funds rate, which is the interest rate at which banks lend money to one another overnight.

However, inflation began to cool in late 2023. As a result, the FOMC has not changed the federal funds rate since July 2023, when it set a target range of 5.25% to 5.50%. 

The committee opted to maintain this rate as recently as June 2024. Federal Reserve Chair Jerome Powell expressed that inflation is still a concern and acknowledged the risks of cutting rates too quickly. At the same time, the committee made it clear that rate hikes are unlikely and indicated there will be one rate cut before the end of the year.

When the federal funds rate adjusts, banks typically follow suit and shift rates for savings and other deposit accounts accordingly. Rate hikes often translate to banks paying higher rates for deposit accounts. Throughout 2023, the national average savings rate steadily increased alongside the federal funds rate—from 0.33% in January 2023 to 0.46% in December 2023, according to the FDIC.

While last year saw rising consumer savings rates, these rates have been stabilizing in 2024. So far, the national average has stayed between 0.45% and 0.47% all year. In the coming months, any Federal Reserve rate cuts can trigger further reductions in savings account APYs.

Learn about today’s savings rates and the APYs institutions currently offer with the federal funds rate in mind.

How High Will Savings Interest Rates Go in 2024?

No one knows for sure how high savings interest rates will go in the near future, but it’ll depend largely on what happens with the federal funds rate. Currently, the target federal funds rate ranges between 5.25% and 5.50%—the highest it’s been in over 20 years.

However, the Federal Reserve has held rates steady in its recent meetings. Looking ahead, the FOMC projects at least one rate cut by the end of 2024.