The Fed Is Raising Rates Again: Here’s What It Means for Savers | Banking Advice
Key Takeaways
- The Fed raised its rate in September and is expected to make another rate hike before the end of the year.
- Banks have responded by upping their yields on certificates of deposit and high-interest savings accounts.
- Mid-term-length CDs may be where the best deals are at, and experts caution against waiting longer for more increases.
The Federal Reserve in September raised its benchmark interest rate for the first time in three years and indicated another rate hike may follow before the year ends.
While elevated interest rates can make borrowing more expensive, they’re good news if you’re looking to earn more on the money you’re parking in the bank.
That’s because banks typically respond to Fed rate increases by raising the rates they pay on savings products such as certificates of deposit and high-yield savings accounts.
An environment like the one we’re in, when already relatively high rates are climbing again, presents an ideal opportunity to shop around for the most competitive yields being offered.
Here’s a look what’s happening with interest rates right now, and how you can take advantage of it.
What’s Going On with the Fed Interest Rate?
The Fed entered 2026 fresh off three consecutive rate cuts, and forecasters anticipated potential further decreases, especially as President Donald Trump was vocal about his desire for incoming Fed Chair Kevin Warsh to continue slashing.
But stubborn inflation and other economic factors halted the downward momentum and reversed the Fed’s direction, ultimately leading the Federal Open Market Committee to act in September, boosting its federal funds rate to a target range of 3.75% to 4%.
Fed governors signaled another potential hike may come before the end of the year.
“It is important to realize how fast the market changes,” says Kenneth Carow, professor of finance at Indiana University’s Kelley School of Business.
What the Rate Increases Mean for CDs and High-Yield Savings Accounts
Rates on CDs and high-interest savings accounts began ticking back up at some institutions in midsummer, and they’ve accelerated their climb since the Fed’s most recent decision.
“The Federal Reserve’s recent rate hike added fuel to a trend that was already underway,” says Mary Grace Roske, head of communications at CD Valet, a comprehensive CD marketplace that provides verified CD rates from federally insured banks and credit unions.
She says the number of CD offers at 4% annual percentage yield or more grew by 180 in the week following the Fed’s rate increase.
Here’s a look at how the one-year CD rate has changed between July 1 and Oct. 15 at several institutions known for offering high yields that U.S. News tracks:
| Institution | July 1 APY | Oct. 15 APY |
| Popular Direct | 4.15% | 4.5% |
| Barclays | 3.25% | 4.5% |
| Marcus by Goldman Sachs | 3.9% | 4.4% |
Some five-year CDs once again are boasting 5% yields, inching back toward the sky-high rates of three years ago. Experts say CD interest rates across various terms could still rise in the coming months.
“If expectations for additional rate hikes prevail, consumers should continue to see attractive CD offers, particularly from institutions looking to grow deposits and lock in funding,” says A’jha Tucker, product manager of deposit growth at Georgia’s Own Credit Union.
High-yield savings accounts have also seen increases at some institutions, although they have yet to rise at the same pace as certain CD terms.
Where and When to Look for the Best Rates
Credit unions and online banks tend to advertise the highest rates on CDs and savings accounts, partially because they don’t have the overhead costs of a large brick-and-mortar bank. But even among these options, it can pay to shop around. Sometimes certain banks will be making a push for deposits and might be more competitive with their rates than their peers, experts say.
“Banks don’t necessarily move CD rates in lockstep with the Fed because they have their own deposit needs and competitive pressures, independent of what the Fed does next,” Roske says. “This dynamic helps explain why you can see significant differences in CD rates across banks, even when all are responding to the same Fed policy environment.”
When looking specifically at CDs, Roske says savers should consider middle-length terms.
“Right now, the sweet spot is in the middle of the curve,” says Roske. “CDs from 12 to 36 months are showing a modest bulge, with top yields pushing towards 4.4% to 4.8%. And don’t be afraid to shop around: Some credit unions are paying as much as 9% APY.”
Why Trying to ‘Time’ the CD Market Doesn’t Always Pay Off
While it may be tempting to wait for rates to edge higher before you pounce, experts say that may not be the best decision.
Even over the past month, forecasts have fluctuated significantly about whether the Fed will raise rates in October, with a majority initially predicting a hike, then a large majority expecting rates to remain steady, then about half leaning each way and finally back to a large majority predicting no increase.
“This shows that even the most knowledgeable investors have a very difficult time predicting rates,” says Carow.
Carow also points to another risk of waiting for better rates. You may be losing more money by remaining on the sidelines.
“Let’s say I decide to keep my funds in a checking account, hoping for a 0.25% increase in rates for a CD that is currently earning 4%,” says Carow. “If I invested today at 4% and held the account for 12 months, I would have 4% interest. If instead I earn 0% in the checking account for two months and then (get) the improved rate of 4.25% for the next 10 months, I would only earn 3.54% over the same 12-month period. Doing nothing with your money as you wait for an increase is the wrong decision.”
