From NextAdvisor: How high will savings account rates go this year? We did the math and asked the experts
For savers, those broader economic changes do have a silver lining: higher interest rates on savings accounts. The average APY on high-yield savings accounts has gone from around 0.50% to 2.50% this year — and as long as the Fed keeps raising rates, experts sayWhen we asked experts for theira few months ago, many made conservative estimates of around 2.5% to 3.0% APY. Those predictions have come and gone, with the average high yield savings rate at 2.
As a result, high-yield savings accounts are where experts expect to see the biggest changes through the rest of this year. However, they have different views on just how much rates will rise:With two Federal Reserve meetings left this year, savings account rates will continue to increase for the rest of the year.
Right now, many high yield savings accounts earn between 2% and 2.5% APY, while the federal funds target rate range is 3% to 3.25%. Even if the Fed raises rates above 4% by the end of the year, some experts argue there will still be a gap.Denise DowneySavings rates could reach 3% by the end of the year, says Downey. “But I would be surprised if I saw them higher than 3%.” , certified financial planner and founder of Alchemist Wealth, a financial planning firm.
“Even the best of the high-yield savings accounts are going to keep some of [those profits]. You’re not going to be able to earn exactly on your cash what [banks] can earn on their cash,” saysFeldmann doesn’t expect savings rates to reach 4% by the end of the year but is hopeful that they will at some point next year.While competitive rates can be useful for boosting your savings balance, they also make borrowing more expensive.
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