
In the last few years, consumers have enjoyed record-high annual percentage yields (APYs) on their savings accounts, thanks primarily to the Federal Reserve raising its federal funds rate in an effort to curb inflation. Inflation slowed in 2024, though, and savings rates fell in tandem during the last quarter.
For 2025, experts predict that savings rates will continue to drop, though not necessarily at a considerable rate.
“Savings rates are likely to stay relatively the same or go slightly lower as the Fed fights inflation and tries to stabilize the economy,” says Gary Grewal, certified financial planner (CFP) and financial adviser at Allworth Financial.
Still, with a new presidential administration taking office, there’s a level of uncertainty around how the political climate could affect the economy, and, as a result, savings rates could fluctuate more than predicted.
Read on to learn more about the savings rate forecast for 2025, how it may affect your finances, and how you can save effectively as rates change.
How Saving Rates Work
In order to understand how savings rates change over time, it's important first to know how banks set their APYs. Banks change their savings rates for a number of reasons, but often, these numbers are closely tied to the federal funds rate.
The Federal Reserve changes the target federal funds rate based on economic conditions, raising the rate to curb inflation and lowering the rate when the economy is slow to boost spending and encourage growth.
“As an example, during the most recent Fed rate cut, savings rates on online savings accounts fell comparably almost immediately,” Grewal says.
While some interest rates — like credit card APRs — are set based on the federal prime rate and change when the fed rate does, banks often set savings rates independently. That means that rates may fall in anticipation of a federal rate cut, even if it hasn’t yet occurred.
Saving Rates in 2025: An Expert Overview
Savings rates are currently high, thanks in part to rate hikes in 2022 and 2023. As of December 2024, the national savings rate was 0.42%, per the Fed. This rate is slightly lower than record highs from the last few years, as the Fed cut its federal funds target rate in the fourth quarter of 2024.
2024 Savings Rate Recap
Rates remained relatively stable for most of 2024. Starting on a high note, the national average savings rate in January of that year was 0.47%, and, thanks to federal rate increases in 2023, savings APYs on high-yield accounts topped 5%.
National Average Savings Rates Through 2024
Month | Rate |
---|---|
January | 0.47% |
February | 0.46% |
March | 0.47% |
April | 0.46% |
May | 0.45% |
June | 0.45% |
July | 0.45% |
August | 0.46% |
September | 0.46% |
October | 0.45% |
November | 0.43% |
December | 0.42% |
In September 2024, however, a cut to the federal funds rate saw a slight decline that continued through the last three months of the year. Savings rates fell in accordance with this cut during the last quarter of 2024, with current rates a bit lower than we saw at the beginning of the year, though still relatively high.
“Right now, rates are in the mid-to-high 3% ranges, with brokerage money market accounts sometimes playing slightly more,” says Grewal.
How and When Will Rates Change in 2025?
“As we look to 2025 and beyond, the trajectory of savings rates will largely depend on how the Fed responds to changing economic conditions,” says Charles Petitjean, CFP and wealth adviser at Barker Wealth Management.
While experts anticipate more rate cuts, it is hard to predict the economic climate with any certainty.
“If inflation continues to show signs of easing, the Fed will continue lowering rates,” Petitjean says. “In this case, I'd expect savings account APYs to gradually decline as banks adjust their rates in response to lower benchmark interest rates. Conversely, if inflation remains persistent or reaccelerates, the Fed may go the other way and begin raising rates again or keep them elevated for a prolonged period. This would likely sustain high APYs for savings accounts, as banks would continue competing for deposits amid a high-rate environment.”
Consumers keeping an eye on rates should follow the Federal Open Market Committee (FOMC) for updates on the federal funds rates and other predictions. The first scheduled meeting for 2025 is set to take place on Jan. 28 and 29. Subsequent meetings are currently slated to occur every other month after that, with the final meetings of the year on Dec. 9 and 10.
Saving in 2025: Tips and Tricks
Savings rates are still high, so consumers should take advantage of high-yield savings accounts and other opportunities to earn interest. In anticipation of rate drops, you can also consider investing in a certificate of deposit (CD) account at a high rate now, locking in a high APY for the next six to 12 months.
“At this point, we can expect that rates will continue to remain higher for longer, increasing the attractiveness of CDs and money market funds,” said Petitjean.
Other tips for maximizing your savings in 2025 include:
- Keep your emergency fund in high-yield savings: Even if rates fall this year, high-yield savings accounts are still a great tool for emergency savings. That is because they offer higher APYs than traditional savings accounts and are still easily accessible if you need funds quickly.
- Check in on your financial plan regularly: While it can be tempting to set and forget your savings, keeping an eye on rates and options for your savings can ensure you are maximizing your return throughout the year. For instance, if rates on high-yield savings or money market accounts drop, consider moving your money to another type of account. Or at least ensure that your high-yield savings account rate remains competitive with top products on the market. (Compare current high-yield savings account offers at online banks.)
- Consider stable investments: When high-yield savings account rates are lower, they aren't necessarily the best choice for more significant balances. Instead, consider investing your money in the stock market. You'll want to work with a financial professional to identify your risk tolerance and best bets.
Frequently Asked Questions
What Is the Fed Interest Rate Forecast for 2025?
The federal interest rate is expected to stay relatively stable in 2025, though experts expect slight cuts to occur. Savings account rates will likely fall in tandem as they are closely tied to the federal funds rates.
Will High-Yield Savings Go Down in 2025?
High-yield savings rates may go down in 2025. Economists and financial experts anticipate that the Federal Reserve will cut rates slightly this year as inflation tames. Savings account rates usually dip in tandem.
Are CD Rates Going Up or Down in 2025?
More than likely, CD rates will remain relatively stable or decrease slightly in 2025. Rates on CDS tend to decrease alongside cuts to the federal funds rate, which are expected this year.