2024-07-24
If you've been enjoying lucrative rates on your savings accounts lately, you're probably wondering if this trend will continue.
With the Federal Reserve keeping its target rate stable, let's dive into what this means for the future of your savings' annual percentage yield (APY).
Current State of Interest Rates
Thanks to the Federal Reserve's actions to curb inflation by increasing the federal funds rate from March 2022 through July 2023, savings rates have soared to as high as 5.00% APY.
Now, in June 2024, the Federal Reserve has paused changes to rates, suggesting that the savings account rates will most likely stay where they are for the time being.
What Guides the Savings Rates?
Savings account rates aren't set in stone. They can fluctuate due to different factors, including the federal funds rate, influenced by the Federal Reserve's strategies to maintain a healthy economy.
When the Fed raises the federal funds rate to tackle higher inflation, banks often increase the APY on savings accounts to attract customers.
Future Forecasts for 2024
Although inflation has come down from its peak, leveling at 3.3% by mid-2024, and remains above the Federal Reserve's 2.0% target, there's an air of cautiousness. For now, savings account rates are expected to remain steady, but predictions indicate a potential decrease later in the year or into 2025.
Federal Reserve Chairman Jerome Powell suggests that the federal funds rate could fall to around 4.1% by the end of 2025, which would also affect savings rates. But remember, these aren't set plans—they are simply projections.
Maximizing Your Savings Now
While savings account rates are projected to stay constant for a bit, you might want to consider other ways to make the most of your funds. High-yield savings accounts are a good pick, offering up to 5.00% APY currently.
As we look toward the rest of the year, think about certificates of deposit (CDs) too. They provide fixed rates that won't change during their term, and you could snag rates up to 5.20% with some banks. Keep in mind, withdrawing early from a CD could mean penalties and lost interest earnings.
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Find saving tips and other financial resources here:
How Will Savings Interest Rates Trend in 2024?
If you've been enjoying lucrative rates on your savings accounts lately, you're probably wondering if this trend will continue.
With the Federal Reserve keeping its target rate stable, let's dive into what this means for the future of your savings' annual percentage yield (APY).
Current State of Interest Rates
Thanks to the Federal Reserve's actions to curb inflation by increasing the federal funds rate from March 2022 through July 2023, savings rates have soared to as high as 5.00% APY.
Now, in June 2024, the Federal Reserve has paused changes to rates, suggesting that the savings account rates will most likely stay where they are for the time being.
What Guides the Savings Rates?
Savings account rates aren't set in stone. They can fluctuate due to different factors, including the federal funds rate, influenced by the Federal Reserve's strategies to maintain a healthy economy.
When the Fed raises the federal funds rate to tackle higher inflation, banks often increase the APY on savings accounts to attract customers.
Future Forecasts for 2024
Although inflation has come down from its peak, leveling at 3.3% by mid-2024, and remains above the Federal Reserve's 2.0% target, there's an air of cautiousness. For now, savings account rates are expected to remain steady, but predictions indicate a potential decrease later in the year or into 2025.
Federal Reserve Chairman Jerome Powell suggests that the federal funds rate could fall to around 4.1% by the end of 2025, which would also affect savings rates. But remember, these aren't set plans—they are simply projections.
Maximizing Your Savings Now
While savings account rates are projected to stay constant for a bit, you might want to consider other ways to make the most of your funds. High-yield savings accounts are a good pick, offering up to 5.00% APY currently.
As we look toward the rest of the year, think about certificates of deposit (CDs) too. They provide fixed rates that won't change during their term, and you could snag rates up to 5.20% with some banks. Keep in mind, withdrawing early from a CD could mean penalties and lost interest earnings.
-
Find saving tips and other financial resources here:
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