We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
What the November Fed Rate Increase Means for Your Bank Accounts
Expect higher rates on savings and CDs. The best yields are at or higher than 3%.
Spencer Tierney is a consumer banking writer at NerdWallet. He has covered personal finance since 2013, with a focus on certificates of deposit and other banking-related topics. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Berkeley, California.
Sara Clarke is a Banking editor at NerdWallet. She has been an editor and project manager in newsrooms for two decades, most recently at U.S. News & World Report. She managed projects such as the U.S. News education rankings and the Best States rankings. Sara has appeared on SiriusXM Business Radio and iHeartMedia’s WHO Newsradio and has been quoted in The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. She is based near Washington, D.C.
Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
You’re following Spencer Tierney Visit your My NerdWallet Settings page to see all the writers you're following.
Discover the bank accounts that fit your financial goals
Just answer a few questions to compare bank accounts that meet your needs.
Your savings account rate might change for the better this November. The reason? The Federal Reserve raised the federal funds rate by three-quarters of a percentage point, or 0.75%, on Nov. 2, marking the sixth increase of this rate in 2022.
After a Fed rate increase, banks and credit unions tend to raise rates on savings accounts and certificates of deposit. But rate changes vary widely by institution, and there’s no guarantee you’ll see a rate bump. Here’s what to know about the November Fed rate and a recent look at which types of bank accounts have seen the highest rate changes.
As the U.S. central bank, the Federal Reserve — or the Fed — is responsible for keeping the economy steady and growing. One of its tools is the federal funds rate, or Fed rate, which is the cost to borrow cash overnight between banks. The Fed raises the rate to help curb inflation.
The amount of a Fed rate increase is measured in basis points. A basis point is one hundredth of 1%, or 0.01%. So this most recent increase is 75 basis points, or 0.75%. The latest increase brings the Fed rate into mid-3% territory.
A Fed rate increase makes borrowing more expensive for banks and consumers, but one silver lining is that banks typically raise rates on savings accounts and newly issued CDs, too. Learn more about the Fed rate’s impact on savings accounts.
4.50%SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.50% APY for savings. SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that are equal to or greater than $5,000 every 30 days. Members without either Direct Deposit or Qualifying Deposits will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 8/2/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
5.50%*Base annual percentage yield (variable) is 4.75% as of 7/31/23. 5.50% APY reflects a .75% boost available as a special offer with qualifying deposit. Terms apply. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
0.50%SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.50% APY for savings. SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that are equal to or greater than $5,000 every 30 days. Members without either Direct Deposit or Qualifying Deposits will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 8/2/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Three types of bank accounts will generally have higher rates following a Fed rate bump: regular savings accounts, CDs and money market deposit accounts. Checking accounts, on the other hand, don’t always earn interest. And when they do, they rarely have rate increases like the others.
Here’s a look at four national average rates at banks for two months: in March — the month of the Fed’s first rate increase this year — and in October, after several Fed rate increases.
Account type
March 2022 national average rate
October 2022 national average rate
Difference
CD for a 1-year term
0.15%.
0.71%.
56 basis points (0.56%).
Money market account
0.08%.
0.23%.
15 basis points (0.15%).
Regular savings account
0.06%.
0.21%.
15 basis points (0.15%).
Interest checking account
0.03%.
0.04%.
1 basis point (0.01%).
Source: Federal Deposit Insurance Corp.
Regular savings accounts and money market accounts have comparable rates, but the latter tend to have higher minimum balance requirements. CDs have the highest yields but also the most restrictions: A CD locks in a fixed rate for a set time, and you can’t withdraw or add money to a CD until a term ends. If you break a CD early, there tends to be a penalty. See more about CDs and how the Fed rate affects them.
… and where you bank matters too
The national average yields are far from the best you can get. Online banks and online credit unions have increased their rates on high-yield savings accounts and CDs dramatically this year alone. You can find accounts with yields above 3% annual percentage yields, and some CDs with five-year terms have reached 4% APY.
What’s more, these online banks and credit unions are among the first banking institutions to raise rates after a Fed rate increase, a trend NerdWallet has observed.
“If the Fed continues to raise interest rates, bank rates can be expected to move higher,” but “often with a lag,” Sayee Srinivasan, chief economist at the American Bankers Association, said in an email. “Banks saw a surge in deposits due to government stimulus programs to combat the impact of the pandemic, and those deposits just recently started to decline.”
When banks need more deposits, they traditionally raise their savings rates. But not all banks respond equally. The three biggest national banks still have the lowest possible rate — 0.01% — on their basic savings accounts. And most of their CD rates aren’t much better.
The economy has changed enough in the past year that you may want to revisit your savings strategies, which can include considering a high-yield savings account or CD or both, says Dana Twight, certified financial planner and owner of Seattle-based Twight Financial Education.
4.50%SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.50% APY for savings. SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that are equal to or greater than $5,000 every 30 days. Members without either Direct Deposit or Qualifying Deposits will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 8/2/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
5.50%*Base annual percentage yield (variable) is 4.75% as of 7/31/23. 5.50% APY reflects a .75% boost available as a special offer with qualifying deposit. Terms apply. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through clients’ brokerage accounts at Betterment Securities.
Min. balance for APY
$0
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
0.50%SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum direct deposit amount required to qualify for the 4.50% APY for savings. SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that are equal to or greater than $5,000 every 30 days. Members without either Direct Deposit or Qualifying Deposits will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 8/2/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
The short answer: most likely. In its September press release, the Fed anticipated that “ongoing increases” to the Fed rate “will be appropriate.” The next time the Fed is expected to decide on an increase is at its Dec. 13-14 meeting.
And experts think more rate increases are on the horizon.
“In its September forecast, ABA’s Economic Advisory Committee, comprised of chief economists from major banking institutions across North America, expected the Fed to continue raising interest rates until the first quarter of next year before potentially lowering rates through the end of 2023,” Srinivasan said in an email. “Everything depends on the ability of the Fed to bring inflation down.”
