{"id":1660,"date":"2026-06-18T06:11:12","date_gmt":"2026-06-18T06:11:12","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=1660"},"modified":"2026-06-18T06:11:12","modified_gmt":"2026-06-18T06:11:12","slug":"how-the-federal-reserve-can-impact-your-savings-accounts-interest-rate","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=1660","title":{"rendered":"How the Federal Reserve can impact your savings account\u2019s interest rate"},"content":{"rendered":"
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When the Federal Reserve hikes or cuts the federal funds rate, interest rates on many types of financial products tend to increase or decrease accordingly. This includes savings accounts, where a higher federal funds rate often means consumers can expect to earn a higher annual percentage yield (APY) on their savings. But, the Fed does not directly set savings account rates. Read on and we\u2019ll explain how what the Fed does can impact your bank accounts.<\/p>\n

Read more Inside Europe\u2019s most innovative companies<\/a><\/p>\n

Are high-yield savings rates expected to change?<\/h2>\n

The interest rates offered on high-yield savings accounts\u2014or any savings account\u2014can change at any time, as these rates are at the discretion of the financial institutions. Still, as of this writing, it\u2019s possible to find HYSAs offering APYs over 4.00%. If the Fed makes cuts to the federal funds rate later in 2026 (as it\u2019s done a few times in the second half of 2025), it\u2019s possible that savings account rates will also see a decline.<\/p>\n

What APY means and how it works.\u00a0<\/p>\n

Consumers looking for a guaranteed rate of return that won\u2019t be impacted by Fed decisions may wish to open CD accounts sooner rather than later. More on that later in the article.<\/p>\n

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What is the federal funds rate?<\/h2>\n

As explained by the Fed itself, the federal funds rate is what banks charge each other when they need to borrow money overnight. The Federal Open Market Committee (FOMC) holds eight meetings per year and has the authority to raise, lower, or hold steady on the federal funds rate at these meetings.<\/p>\n

At the most recent FOMC meeting on June 17, 2026, the Fed maintained the federal funds rate of 3.50%-3.75%, writing in a statement, \u201cEconomic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.\u201d<\/p>\n

Dropping the federal funds rate is one of the Fed\u2019s tools to stimulate the economy when there\u2019s fear of a recession. For example, the Fed cut this rate to effectively zero during the coronavirus pandemic. In contrast, hiking the rate is one of the Fed\u2019s tools for combating inflation.<\/p>\n

Post-pandemic, the central bank hiked the federal funds rate 11 times in 2022 and 2023, then paused and held steady for more than a year before finally making three rate cuts in the last quarter of 2024.<\/p>\n

The fact that the Fed decided not to tweak the rate means it believes the economy is roughly on track.<\/p>\n

How Fed rate cuts and hikes can impact your savings rate<\/h2>\n

Even though the Federal Reserve does not set APYs on savings accounts, it\u2019s true that banks and credit unions may increase or decrease the rates they offer when the Fed adjusts the federal funds rate. For that reason, a higher federal funds rate may benefit your savings account, and conversely, a lower federal funds rate is likely better for those who need to borrow money through products such as mortgages.<\/p>\n

Below, you can see how the Fed rate cuts in 2024 led many institutions to lower their rates on savings accounts. These levels are likely to stay fairly steady until we see further interest rate changes, but there are no guarantees on how long the rates will last. Savings account rates can change any time, at the discretion of the bank.<\/p>\n

How to maximize the interest you earn on your savings<\/h3>\n

The average savings account yields 0.38% as of June 2026, according to the FDIC. That\u2019s less than ideal, but it\u2019s important to understand the average is weighed down by the majority of accounts that offer little to no return on your deposits.<\/p>\n

You can get a much better rate by shopping around for a high-yield savings account. In general, you\u2019ll often be able to find higher interest rates for online-only savings accounts as opposed to savings accounts at institutions with brick-and-mortar branches.<\/p>\n

Read more Vanguard\u2019s alarming state of retirement in 2026: The average American has $167,970 in their account\u2014or they have $44,115<\/a><\/p>\n

When the Federal Reserve hikes the federal funds rate, businesses as well as individuals feel the squeeze. Not only does it tend to get more expensive to borrow with loans and on small business credit cards, but consumers may pull back on discretionary spending as more of their budget goes toward paying off debt.<\/em>\n<\/p>\n

What about CDs and other bank accounts?<\/h2>\n

The federal funds rate can have an indirect effect on your certificates of deposit (CDs) and other types of financial accounts in much the same way it can impact your savings. Here\u2019s what you need to know.<\/p>\n

Certificates of deposit<\/h3>\n

This type of deposit account is probably where we\u2019ve seen the most impact so far. Top rates on certificates of deposit dropped from nearly 6% in the summer of 2024, to below 5% in January 2025. If the Fed declines to make further cuts in 2026, those rates will likely stay relatively the same.<\/p>\n

The upside of a CD, though, is that you\u2019re locked into that interest rate for the full length of the term. That means if you get a 4.50% CD now that lasts two years, you\u2019re guaranteed that rate of return for the whole two years regardless of what happens to the fed funds rate in the meantime.<\/p>\n

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Money market accounts<\/h3>\n

These types of deposit accounts function similarly to checking accounts, with much higher yields but lower rates than HYSAs. They\u2019re good for stashing large amounts of cash you don\u2019t use often but would want to be able to access quickly in case of emergency. Much like savings accounts, you\u2019ll almost certainly see an impact on these rates that correlates with shifts in the market.<\/p>\n

The best money market accounts of June 2026<\/p>\n

Checking accounts<\/h3>\n

Reality check: Considering how low most rates are, any interest you might earn on a checking account is icing on the cake and not the sole focus. Fed policy changes have a negligible impact on checking accounts but considering how low the APYs are already, it\u2019s not a significant concern.<\/p>\n

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