Americans are experiencing interest rate hikes on variable mortgages, revolving credit card debt, and new home loans. But — apart from the intended consequence of Fed interest rate hikes helping to stem inflation — there is another, small silver lining: Your money in the bank may collect more interest.
High-yield savings accounts and certificates of deposit may see increased interest rates, though not immediately. Fortunately, any potential interest rate hikes on your credit card debt will also take time to appear, as companies need to provide 45 days notice before increasing rates or fees.
Peter Tanous, founder and chairman of Lynx Investment Advisory, told Forbes that banks react in different ways to interest rate changes. “They are slow as molasses to raise the rates they pay on deposits,” he said.
Currently, the national average interest rate for savings accounts sits at just 0.07%, according to GOBankingRates.
You may be able to earn more on your savings by choosing an online savings account with higher yields. Remember to take into account banking fees, which could offset your interest earnings. GOBankingRates spotlighted Sallie Mae Bank’s SmartyPig Account with a 0.70% APY, as one of the best savings accounts for its high yields and no monthly fees.
The added interest you’ll collect on a savings account is unlikely to keep pace with double-digit inflation, however — or even offset the increased credit card interest rates you may experience if you carry a balance. Still, every additional dollar in your pocket counts when you’re saving for a rainy day, which is really the purpose of keeping money in an easy-to-access bank savings account.
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