Savings Rates – October 5, 2021
Checking on current savings rates online, the best savings rates available right now top out at 0.60 percent. Before the pandemic, we were scoffing at savings rates around 1.00 percent, now we would be happy to get a rate at 1.00 percent or higher.
Savings rates plummeted during the pandemic, haven't recovered yet, and probably won't until the Federal Reserve increases the fed funds rate. At the beginning pandemic, when there were record job losses, people just stop spending, not to mention the limited options people had to spend money.
The downward pressure on savings rates wasn't only from the Fed lowering the fed funds rate, banks were flushed with deposits as well, driving savings rates even lower. Some national banks didn't want your money, offering savings rates of 0.05 percent.
During this time, there was a really sharp increase in the personal savings rate (savings as a percentage of disposable personal income), increased from around 7.2 percent in December 2019 to a record high of almost 33.7 percent in April 2020. The rate is still elevated as of June 2021 at 9.4 percent.
Savings Rates - October 5 2021
The Fed isn't expected to increase the fed funds rate until late 2022 or maybe not even until early 2023, whether that is the case remains to be seen. Inflation is the one thing that force savings rates higher sooner. Inflation is a big concern as of late, but most analysts see the increase as transitionary and will decrease in the coming months. If inflation accelerates, we might see the highest savings rates we have seen in years.
If you're looking to open a savings account, your best bet is doing it online. You will definitely get higher savings rates online than you will at a traditional brick and mortar bank or credit union.
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