When the Federal Reserve raises interest rates, it usually does so to slow inflation and cool down rising prices. One side effect of higher rates is that banks may eventually increase the interest they pay on savings accounts. That’s good news for savers but it doesn’t mean every bank will raise rates quickly or fairly.
Banks are often slow to reward depositors, so if you want your money to work harder, you may need to shop around. Whether you’re sticking with your current bank or looking elsewhere, knowing what to look for can help you earn more without taking on extra risk.
Below are practical, beginner-friendly tips to help you find a better savings account when rates are on the way up.
Check Out Credit Unions and Community Banks
Big national banks aren’t always the best place for savings. Credit unions, which are nonprofit financial institutions, often pay higher interest on savings accounts and charge fewer fees.
Credit unions are federally insured by the National Credit Union Administration (NCUA), which protects deposits up to $250,000 per person, per institution, just like FDIC insurance at banks. That means your money is just as safe.
Small local banks can also be worth a look. Because they compete with larger banks, they sometimes offer better rates or more flexible terms to attract customers.
Don’t Ignore Online-Only Banks
Online banks don’t have branches, tellers, or expensive real estate. Because their costs are lower, many of them pass those savings on to customers through higher interest rates.
If you’re worried about safety, here’s the key thing to remember: as long as the bank is insured by the Federal Deposit Insurance Corporation (FDIC), your money is protected up to $250,000 per depositor.
Many online banks are backed by well-known financial companies, which can offer extra peace of mind. Always confirm FDIC insurance before opening an account.
Be Careful With Eye-Catching Intro Rates
Some banks advertise flashy rates or cash bonuses to grab attention. These offers can be tempting but they don’t always last.
A “teaser rate” is a high interest rate that drops after a short promotional period. Once the promo ends, your account may earn much less than you expected.
Before signing up, read the fine print. Look for the ongoing rate, not just the introductory one. A slightly lower rate that stays consistent may be better than a short-term spike followed by disappointment.
Compare Savings Accounts and CDs Thoughtfully
Certificates of deposit (CDs) can offer solid returns, especially if you don’t need access to your money for a while. But CDs require you to lock up your cash for a fixed period sometimes years.
When interest rates are rising, locking into a long-term CD may not be ideal. You could miss out on better rates later. In some cases, high-yield savings accounts offer similar returns without tying up your money.
If flexibility matters to you, a savings account may be the better choice.
Watch Out for Minimums and Fees
A high interest rate doesn’t mean much if fees are quietly eating into your balance.
Some banks require large minimum balances sometimes $10,000 or more to earn the advertised rate. Others charge monthly maintenance fees if your balance drops too low.
Before opening an account, make sure you understand:
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The minimum balance required
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Monthly or maintenance fees
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How easy it is to avoid those fees
The best savings accounts are simple, transparent, and fee-free.
Automate Your Savings (So You Don’t Have to Think About It)
Most people spend whatever money sits in their checking account. That’s normal. The easiest way to save more is to make it automatic.
One simple method is setting up automatic transfers from checking to savings every time you get paid. Even small amounts $10, $25, or $50 can add up over time.
Another option, offered by some banks, is round-up savings. If you spend $7.40 on coffee, the bank rounds it up to $8.00 and moves the extra $0.60 into savings. It’s painless and surprisingly effective.
Because these methods happen automatically, you save without relying on willpower.
Why a Good Savings Rate Really Matters
Money earned from interest is about as close to “free money” as it gets. You’re paid simply for keeping your cash in the right place.
And if your savings are within FDIC or NCUA limits, they’re among the safest places your money can be. No market risk, no complicated strategies just steady growth and peace of mind.
When interest rates rise, taking a little time to choose the right savings account can make a real difference over the long run.
