After the Fed meeting, what should you expect from your savings rates?

Insider

After the Fed cut rates three times in the second half of 2024, savings account interest rates started falling, and it doesn’t look like that will change anytime soon. But that doesn’t mean you’re out of opportunities to earn.

Transcript

00:00So, at its January meeting, the Fed announced that it would not be doing anything with interest

00:05rates right now.

00:06Here's what that means for your savings account.

00:07In 2024, we saw the Fed cut interest rates several times, which also had an immediate

00:14impact on savings accounts.

00:16You also started to see those interest rates fall.

00:19Right now, we know that the Fed is going to hold steady, but in terms of saving, it's

00:22always great to save and you still have options for increasing your savings rate.

00:27One would be a high-yield savings account.

00:30Right now, regular bank savings accounts, they're averaging .42%, which is really low.

00:36But if you look at a high-yield savings account, all of them are averaging at 4%.

00:42This is a great way to save money, earn a higher interest rate, and it is great for

00:47short-term saving.

00:49Your next option would be your Certificate of Deposit, commonly known as a CD.

00:54This is where you actually get to lock in the interest rate, and they're all averaging

00:59over 4%.

01:01With a CD, even though you lock in that rate, if you withdraw the money early, there's going

01:07to be a penalty.

01:08It is not for money that you might need immediately.

01:11This is not for your vacation fund, your emergency fund.

01:15This is something that you know that you can sock away for a year, set it and forget it,

01:21and just let it earn that higher interest rate.

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