Savings Interest Rate Forecast

The Federal Reserve cut interest rates in 2024 after having raised them 11 times throughout 2022 and 2023 to combat inflation, but savings rates still haven’t substantially declined. We may see further interest rate cuts from the Federal Reserve this year.

Although higher interest rates make borrowing more expensive, they also mean higher yields on savings accounts, and savers can still make the most of elevated interest rates.

See what to expect from savings interest rates in 2025 and learn how to capitalize on these trends.

[Read: Best Savings Accounts.]

What Savings Interest Rates Did in 2024

The Fed made three cuts to its benchmark interest rate in late 2024. It lowered the federal funds rate by half a percentage point in September, one quarter of a percentage point in November and one quarter of a percentage point in December, to end the year at a range of 4.25% to 4.5%.

Interest rates are still fairly high despite those cuts, and rates for mortgages, personal loans, credit cards and savings accounts have also stayed high.

What to Expect From Savings Rates in 2025

Although inflation has eased, the current level of 2.7% remains above the Fed’s target rate of 2%. That could prompt further rate cuts in 2025.

Experts anticipate further rate cuts in 2025, but the Fed is likely to proceed cautiously. Fed officials largely anticipate two quarter-point rate cuts this year, but the Fed’s December 2024 meeting minutes indicate uncertainty over where inflation is headed in light of the trade and immigration policy shifts expected from the incoming administration.

[See: Best High-Yield Savings Accounts in 2025]

Strategies for Maximizing Savings Rates

You can earn more from your savings account while interest rates remain high. It’s a good time to take advantage by finding savings accounts and certificates of deposit with the highest annual percentage yields.

To get the maximum APY, look for high-yield savings accounts offered by digital banks, says money coach and certified financial planner Ohan Kayikchyan. These banks don’t have the substantial overhead costs of traditional brick-and-mortar financial institutions, so they can offer more competitive interest rates.

However, be sure to read the fine print on savings rates. Bonus rates, or introductory or teaser rates, are often an incentive to open a new account but may reset after a certain period. Also, find out if there’s a balance requirement to get the advertised rate. If you have money in a savings account and are considering moving to a different bank with a higher savings rate, see if your current bank can give you a better rate first. “Ask your current bank what they can do for you to keep your relationship and not move your money to a competitor,” says Kayikchyan.

Freeman also recommends checking with credit unions that have high-yield savings rates. Unlike traditional banks, credit unions operate under a not-for-profit model, which helps them offer members more competitive rates.

Another option is putting money in CDs, which generally offer higher interest rates than savings accounts. CDs also allow you to lock in an interest rate, which will stay the same even if market rates drop.

However, there’s a trade-off in flexibility because a CD requires you to leave the money in the account for the full term. For example, if you open a one-year CD, you’ll need to leave money in your account for a year.

One option is to build a CD ladder by staggering maturity dates. A simple CD ladder might involve opening a one-year CD every month for a year. That can help you take advantage of high savings rates now and potentially rising rates in the near future while still maintaining access to your funds as the CDs mature.

Also, watch for bank account bonuses, which can pay hundreds of dollars when you open new eligible savings accounts. You’ll typically need to keep the account open, make a qualifying deposit and maintain a minimum balance for a specified period to earn the bonus.

More from U.S. News

What’s the Best Account for an Emergency Fund?

What Is a Good Interest Rate on a Savings Account?

How to Open a Bank Account Online

Savings Interest Rate Forecast originally appeared on usnews.com

Update 01/13/25: This story was published at an earlier date and has been updated with new information.

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