Ultimately, trying to save in the current environment will become more difficult to yield value. “For people with growing debt, even those with a savings account, this hike worries me because many people are struggling to pay off existing debt while managing increasing living expenses, as we saw a 9.1% increase in June according to the Consumer Price Index report,” says Brown. Like McBride, she warns about how purchasing power will decrease if rates stay below growing inflation rates. Natalia Brown, chief client operations officer for National Debt Relief (NDR), says different banks may increase rates at different rates over time. In light of a 1% hike, many savers need to be mindful. To be sure, not everyone with a savings account will see their accounts increase as a result of the hike. You can find some of the best savings account rates here.)īut, he adds: “While the rising savings yields are certainly welcomed, inflation still has to come down in a substantial way before those better returns truly stand out.” “With the biggest improvement being seen on savings accounts, money market accounts and CDs with maturities of 2 years and less,” says McBride. Indeed, he says returns on savings accounts and CDs are poised for further improvement in the months ahead. What will happen to interest rates on savings accounts and CDs down the road?Ĭontinued aggressive rate hikes will sustain the momentum we’re seeing in improving savings returns, says McBride. At the pace rates are rising, these high water marks will be quickly surpassed,” says Greg McBride, chief financial analyst at Bankrate. “The top-yielding savings accounts have hit 2% and CDs can pull in 2.5% on a 1-year CD or as more than 3% on maturities of three years and longer. “Consumers can take advantage of these rate increases by shopping around for a new account, with better interest rates, especially since higher interest rates can help mitigate the effects of high inflation,” says Bessette.Ĭurrently, the most competitive online banks are continually leapfrogging each other, raising rates on savings accounts and CDs. Indeed, past rate hikes have already benefited savers with interest rates rising on checking accounts, savings accounts and certificates of deposit (CDs), says NerdWallet’s banking specialist Chanelle Bessette. (You can find some of the best savings account rates here.) And a recent Bloomberg headline said we can expect the “Fed to inflict more pain on economy as it readies big rate hike.” At least one group of Americans have already benefited from these rates hikes, and will do so in the future too: savers. Reuters wrote on Wednesday that the Fed will “unveil another big rate hike as signs of economic slowdown grow,” noting its expectation is that the Fed will hike its key interest rate by three-quarters of a percentage point. Some pros are speculating that the Fed could raise interest rates 1% at their July 26 meeting.Įxperts predict the Federal Reserve will raise rates at their July 27 meeting in a bid to curb soaring inflation.
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