What Impacts Bank Account Rates Mid-2023

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Rates on savings accounts and certificates of deposit are seeing highs not seen for at least a decade. But what exactly impacts the rate of your bank account?

Let’s break down a few factors.

Fed rate increases push up savings rates

From March 2022 to May 2023, the Federal Reserve has steadily increased its federal funds rate, or Fed rate, from nearly zero to around 5%. These ongoing rate increases are the Fed’s attempt at curbing high inflation. The rate itself is the one U.S. banks use to borrow or lend money overnight between each other, and a higher rate means higher borrowing costs.

Banks and credit unions, in turn, take their cue from Fed rate increases to raise their rates on certain loans as well as savings accounts and…

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This article was written by Spencer Tierney and originally published on www.nerdwallet.com