JGI/Jamie Grill/Tetra Images/Getty Images
Key Takeaways
- The top yielding high-yield savings rate saw a slight decline last week to 4.40 percent APY (Openbank) from 4.45 percent APY (BrioDirect).
- The Federal Reserve’s next Federal Open Market Committee meeting will be held on May 6–7, where the Fed will decide whether to raise, lower or maintain its federal funds rate.
- Future yields depend on the next Fed decision.
As the Federal Reserve’s Federal Open Market Committee prepares for its meeting later this week – its third of eight scheduled meetings for this year – savers are waiting to see how the next rate decision will impact high-yield savings accounts. Experts expect the Fed to hold rates steady in response to inflation and economic uncertainty.
Right now, inflation is at 2.4 percent, which continues to linger above the Fed’s target rate of 2 percent. Rates typically move in lockstep with the federal funds rate, so holding rates steady would likely mean not much would change for high yield savings accounts (HYSAs).
Because the Fed has paused rate changes so far this year, savers are still benefiting from elevated APYs. Right now, HYSAs remain an attractive option for saving money. However, if the Fed starts to cut rates, these yields could enter a downward trend, making it harder to earn interest in savings.
What are today’s best savings accounts and rates?
For now, HYSAs continue to offer healthy returns. Online banks offer the best yields. Although top high-yield savings rates remain elevated, the top rate slightly declined.
BrioDirect was the top rate last week, offering 4.45 percent APY. As of this writing, the top rate is 4.40 percent, offered by Openbank. Despite a slight decline, top yields are still surpassing 4 percent annual percentage yield (APY), outpacing the national average of 0.57 percent APY.
Note: Annual percentage yields (APYs) are as of May 5, 2025. APYs for some products may vary by region.
The latest news from the Federal Reserve
The Federal Reserve is expected to keep its benchmark interest rate steady during its May meeting. This decision is likely influenced by the recent jobs report, which demonstrated strong job growth, and ongoing concerns about inflation. The federal funds rate, which is currently at a range of 4.25 – 4.5 percent, has remained unchanged since the Fed met on Dec. 18, 2024.
Is it still a good time to open a high-yield savings account?
Yes, for now. High-yield savings accounts remain a strong option for savers, considering that rates are relatively stable. The current environment allows savers to lock in APYs of 4 percent or higher.
If the Fed begins cutting rates later in the year, yields on savings accounts will likely start to decline. If you open an account now, you’ll be able to benefit from current high rates.
What to look for in a high-yield savings account
Consider the following when deciding on a HYSA:
- APY: Look for the highest yields but also check if the rate is promotional or long-term.
- Minimum balance requirements: Some accounts require a minimum deposit to earn the advertised APY.
- Fees: Avoid accounts with monthly maintenance or withdrawal fees.
- Accessibility: Make sure the account offers convenient online and mobile banking options.
- FDIC insurance: Confirm the account is with an FDIC-insured bank.
Looking ahead
Federal Reserve Chairman Jerome Powell stated that the Fed will continue to monitor job growth and inflation. These two factors will inform them about future rate moves.
The Federal Reserve remains squarely focused on achieving its dual-mandate goals of maximum employment and stable prices for the benefit of the American people. The economy is strong overall and has made significant progress toward our goals over the past two years.
— Jerome Powell | Chairman, Board of Governors of the Federal Reserve
The Fed predicts there will be roughly two rate cuts for 2025. However, this is dependent on economic outcomes.
Bottom line
High-yield savings accounts, or HYSAs, remain a good option for savers because they offer APYs above traditional savings accounts. The Federal Reserve is expected to hold rates steady at its upcoming meeting on May 7, so savers can still take advantage of elevated rates, should the Fed decide to lower rates at this week’s Fed meeting.
Be aware that there’s the potential for rate cuts later in the year. So now is a good time to open or fund a HYSA so you can lock in current yields.
Read the full article here
