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Dispatches Interest Rates

Savings Account Yields Are the Highest Since 2008

After more than a decade of extremely low interest rates, savers are finally seeing yields on their cash savings rise.

by Charles Rotblut | December 2022

Charles Rotblut leads a class in AAII's new Essential Investing Video Course. Go to https://www.aaii.com/ves for more information and to subscribe.

After more than a decade of extremely low interest rates, savers are finally seeing yields on their cash savings rise.

As of November 2, 2022, the national average interest rate on savings accounts was 0.16%. This is up from 0.06% at the start of the year. The average interest rate on a one-year certificate of deposit (CD) was 1.11% in early November versus 0.14% in early January.

Thank the Federal Reserve for these higher rates. The target federal funds rate was set at a range of 3.75% to 4.00% at the November Federal Open Market Committee (FOMC) meeting. This is quite a change from the 0.00% to 0.25% range that existed prior to the first rate hike in March.

“Yields on cash investments have improved dramatically in 2022, with savers seeing the best yields since 2008—if you’re looking in the right place,” Bankrate.com’s chief financial analyst Greg McBride told us. “Many of the larger banks are still dragging their feet on raising payouts on savings accounts and CDs but there are plenty of competitive, federally insured offers available. Put your savings where it will be welcomed with open arms and higher yields.”

FIGURE 1 Average and Top Savings Account Yields

FIGURE 2 Average and Top CD Yields

The top yields displayed in the two charts here illustrate the advantages of shopping around. Often, the highest rates are available to those who are willing to bank online. AAII members, for instance, can earn 3.05% on savings accounts and 4.05% on a one-year CD through an affinity program AAII has with Discover Bank as of mid-November 2022.

If you choose to shop around for a higher interest rate, verify that the bank is insured by the Federal Deposit Insurance Corp. (FDIC) or that the credit union is insured by the National Credit Union Administration (NCUA).

Discussion

CESARE T from FL posted over 3 years ago:

Fidelity offers investors brokered CDs, which are CDs issued by banks for the customers of brokerage firms. The CDs are usually issued in large denominations and the brokerage firm divides them into smaller denominations for resale to its customers. Because the deposits are obligations of the issuing bank, and not the brokerage firm, FDIC insurance applies. On 12/3/2022 the following rates were available: 3 months 4.2%, 6 months 4.6% and 12 months 4.75%. There are other Cd's with different maturities also available.


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