Stop Waiting for the Fed — Savings Rates Are Rising Now

Forget all the speculation about when the Federal Reserve will hike rates next: Your savings could be yielding twice as much interest. Here's the secret.

Stop Waiting for the Fed — Savings Rates Are Rising Now Photo by Jason Stitt /

The Federal Reserve announced today it is leaving its benchmark federal funds rate right where it is — in a range of 1 to 1.25 percent.

The Fed last raised rates in June, so today’s inaction offers a bit of a breather between that rate hike and any increases later this year. But you don’t have to wait on the next hike to find a higher interest rate for your savings.

In fact, rates already are on the rise.

With the Fed having made four hikes in the past 18 months, some banks have started increasing the interest rates they offer on savings accounts. You won’t learn that from the typical news and speculation the follows Federal Reserve meetings, though.

The federal funds rate

The federal funds rate is expected to continue rising slowly but surely. Based on the past few rate hikes, the time span between hikes is gradually narrowing:

  • December 2015: The Federal Reserve increased its federal funds rate from a range of 0 to 0.25 percent to a range of 0.25 to 0.5 percent — its first hike in seven years.
  • December 2016: Increased to 0.5-0.75 percent
  • March 2017: Increased to 0.75-1 percent
  • June 2017: Increased to 1-1.25 percent

Last month, the Fed said it expected “economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.” Today, it said the labor market “has continued to strengthen.”

Capitalizing on recent Fed rate hikes

The national average percentage yield, or APY, on savings accounts stands at 0.06 percent as of this week, according to the FDIC.

APY is defined as the yearly amount you earn on savings, including compounded interest. Annual percentage rates, or APRs, do not include compounded interest. So comparing APYs is the better way to compare interest-bearing accounts.

You wouldn’t know it judging by the average APY, but some banks already have started increasing their interest rates.

Some of us here at Money Talks News have noticed it in our savings accounts. Additionally, reported last week that APYs for certificates of deposit, or CDs, have reached a five-year high, with the average five-year CD yielding about 1.5 percent.

Consider these higher APYs that have emerged in recent months:

  • Discover Bank: online savings accounts (1.75 percent as of July 2018)
  • Ally Bank: online savings accounts (1.15 percent)
  • American Express Bank: online savings accounts (1.15 percent)
  • Barclays: online savings accounts (1.2 percent) and CDs (as high as 2.3 percent)
  • Synchrony Bank: online savings accounts (1.2 percent) and CDs (as high as 2.35 percent)

For plenty of other options, check out Money Talks News’ savings account comparison tool.

If you find someplace that offers more in interest than your current savings account, check out “5 Simple Steps to Painlessly Switch Banks.”

Have you taken advantage of rising yields for savings accounts? Let us know below or on our Facebook page.

Karla Bowsher
Karla Bowsher
I’m a freelance journalist and former newspaper reporter who has covered both personal and public finance. I've worked for a top 50 major metro daily and a community newspaper as well as ... More


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