The Fed Increased The Interest Rates Again. Fill Up Your Savings Account Now, Here’s Where You Can Earn 3%-5%
On Wednesday, The Federal Reserve increased its benchmark interest rate by half a percentage point, causing to bring the federal funds rate up to the highest level since 2007. Although that’s likely not good news for those with say, credit card debt, for those looking for a higher-interest savings account.
According to a published post by Yahoo Finance, Greg McBride chief financial analyst at Bankrate said many accounts are currently paying 3% or more, and you can see some of the highest savings account rates you may get now here. How much do you need in savings? The general rule is that you should plan to keep anywhere from 3-12 months of necessary income in an emergency fund.
Factors like your, marital status, age, and career all play a role in exactly how much emergency savings you need. Where do you put your money: Savings account, MMA vs CDs. Experts agree that you should put your emergency fund money someplace safe, like a high-yield money market account, savings account, or a CD
The advantages of savings accounts are ease of saving, flexibility, earning interest, and knowing your money is safeguarded. However, there can be drawbacks to having your money in high-yield savings accounts too, like withdrawal limits that incur fees when you’ve surpassed the number of withdrawals in a month. These accounts are also not ideal for retirement savings pros say; there you’re better off investing that money.
Interest Rates Increased by the Feds One More Time
Risk-averse investors or anyone only looking to invest money for the short-term should consider CDs, as they can be useful in terms of protecting principal, while still allowing for a little bit of interest to be earned.
Money market accounts (MMAs) are savings accounts that have debiting and check-writing abilities accompanied by higher interest rates than traditional savings accounts. What to know before opening an MMA, savings account, or purchasing a CD.
Make sure you have the protection of federal deposit insurance, that you’re able to meet any balance requirements to avoid any monthly fees, and that you can easily get money out and into the account when needed before opening a savings account you have to do all of those mentioned.
McBride said, “Often, linking the account to the checking account at your current bank or credit union is an easy way to move money back and forth.” Nobody can tell for certain where interest rates will take off, but with more rate hikes potentially looming on the horizon, savers can expect a modification in returns for savings accounts and CDs, particularly at online banks, smaller community banks, and credit unions.
McBride again said, “The outlook for additional rate hikes is a promising one for savers, especially at the point we start to see a retreat in inflation.”