Images by GettyImages; Illustration by Hunter Newton/Bankrate
Expect savings and money market account yields to slide lower this year, but they still should outpace inflation, according to the latest forecast from Bankrate chief financial analyst Greg McBride.
McBride believes savings and money market yields will be 4.45 percent annual percentage yield (APY) for top-yielding nationally available accounts at the end of 2024 – 90 basis points lower than at the end of 2023.
Meanwhile, the national average yield is projected to be 0.3 percent APY for savings accounts and 0.35 percent APY for money market accounts by the end of 2024.
McBride says to expect two 25-basis point rate cuts from the Federal Reserve in 2024. But if inflation stays lower as expected, it will be another banner year for savers, McBride says.
“Any periods where yields were outpacing inflation tend to be pretty short-lived,” McBride says.
“As interest rates slip a little bit I think there’s a natural inclination to think that the situation is deteriorating for savers. But in reality, it’s still going to be a very good year and if inflation were to fall faster than deposit yields it would actually be an even better year.”
Key takeaways
- The national average rate for savings accounts will be 0.3 percent by the end of 2024, McBride forecasts, while predicting an average of 0.35 percent for money market accounts.
- At the end of 2024, the top-yielding nationally available money market account and savings account are projected to be at 4.45 percent APY.
- Top savings and money market account yields will outpace inflation again in 2024. But if you’re in an account that’s not earning a competitive yield, you won’t be taking advantage of this rate environment.
What happened to savings account and money market account rates in 2023
Four of the Fed’s 11 rate increases in the current rate increase cycle occurred in 2023. These rate increases accounted for only 100 basis points of the 525 basis points of rate increases since March 2022.
Rate increases and inflation coming down were a win for savers
The difference between 2022, which featured some large and frequent rate increases, and 2023 for savers was inflation. In 2023, inflation came down to levels closer to normal – marking a time when top savings yields were outpacing inflation. Top money market yields were also outpacing inflation.
Since March 2023, top savings yields have been outpacing inflation. This is very different fromJune 2022, when inflation was at 9.1 percent and the top savings yield was only 1.61 percent APY at that time.
Next steps for consumers
Consumers earning anything near or below the current national average of 0.57 percent APY for savings accounts and 0.46 percent APY for money market accounts should shop around and find a competitive yield – and the account that’s right for you. You should be able to find an account that doesn’t have a minimum opening deposit requirement or a monthly service fee – so these accounts are for most people.
Money market accounts are a type of savings deposit account. Some might have the additional convenience of check-writing privileges, which is an uncommon feature in a savings account.
“If you have that separated into a high yield savings account, it helps reinforce the savings habit because it’s off by itself, and it’s generating a higher level of interest earnings that can help reinforce the good savings habits,” McBride says.
FAQs
The national average rate for savings accounts will be 0.3 percent by the end of 2024, McBride forecasts, while predicting an average of 0.35 percent for money market accounts. At the end of 2024, the top-yielding nationally available money market account and savings account are projected to be at 4.45 percent APY.
What will money market rates be in 2024? ›
As of May 2024, investors can earn 5 percent or more in money market funds, a decent return for taking very little risk. These yields are very sensitive to changes in Fed policy, however, so if rates do come down, the yields on money market funds will also fall.
What will interest rates be in 2024? ›
Will we see lower mortgage rates in 2024? Most housing market experts predict rates will end the year between 6% and 6.5%.
Which bank is giving 7% interest in savings accounts? ›
Currently, no banks are offering 7% interest on savings accounts, but some do offer a 7% APY on other products. For example, OnPath Federal Credit Union currently offers a 7% APY on average daily checking account balances up to and under $10,000.
What will CD rates be in 2024? ›
The Fed has held interest rates steady so far in 2024, with a target rate of 5.25% - 5.50%.
Will interest rates be high in 2024? ›
The general consensus among industry professionals is that mortgage rates will slowly decline in the last quarter of 2024. The projected declines have shrunk, though, in recent months. At the start of the year, for instance, Fannie Mae predicted rates would drop to 5.8%.
Will interest rates still be high in 2024? ›
In our baseline, slower growth and a weaker labor market help to rein in inflation while the economy throttles back but avoids stalling. Our baseline scenario has one Federal Reserve rate cut towards the end of the year. As a result, we expect mortgage rates to remain elevated through most of 2024.
What is the interest rate forecast for 2024 2025? ›
MBA: Rates Will Decline to 6.4% In its April Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.8% in the first quarter of 2024 to 6.4% by the fourth quarter. The industry group expects rates will fall below the 6% threshold in the fourth quarter of 2025.
Where will interest rates be in 2025? ›
The median estimate for the fed-funds rate target range at the end of 2025 moved to 3.75% to 4%, from 3.5% to 3.75% in December. For the end of 2026, the median dot now shows a target range of 3% to 3.25%, versus 2.75% to 3% three months ago.
What is the interest rate forecast for the next 5 years? ›
Trading Economics offers a more optimistic outlook, predicting a rise to 5% in 2023 before falling to 4.25% in 2024 and 3.25% in 2025.
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Where can I get 12% interest on my money? ›
Where can I find a 12% interest savings account?
| Bank name | Account name | APY |
|---|
| Khan Bank | 365-day, 18-month and 24-month Ordinary Term Savings Account | 12.3% to 12.8% |
| Khan Bank | 12-month, 18-month and 24-month Online Term Deposit Account | 12.4% to 12.9% |
| Yield | N/A | Up to 12% |
| Crypto.com | Crypto.com Earn | Up to 14.5% |
6 more rowsJun 1, 2023
7% Interest Savings Accounts: What You Need To Know
- As of May 2024, no banks are offering 7% interest rates on savings accounts.
- Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
The national average yield for five-year CDs at the end of the year will be 1 percent APY, McBride predicts, with top-yielding five-year CDs paying 4 percent APY. The national average rate for one-year CD rates started out at 1.07 percent in 2023, and it rose to 1.73 percent by the end of the year.
How long will CD interest rates remain high? ›
Here's a quick comparison: From mid-December 2023 to mid-February 2024, the midpoint for one-year CD rates at 21 online banks and credit unions dropped from 5.30% to 5.00% annual percentage yield, according to a NerdWallet analysis. While not drastic, more rate drops may be coming.
Will CD rates ever be high again? ›
CD rates will rise or fall depending on how the Fed interprets its ability to manage interest rates without damaging the economy. With inflation still stubbornly high, expect CD rates to remain elevated this year, potentially dipping later on as the CPI nears the target rate.
What is the projected money market rate? ›
At the end of 2024, the top-yielding nationally available money market account and savings account are projected to be at 4.45 percent APY. Top savings and money market account yields will outpace inflation again in 2024.
Where will rates be in 2025? ›
One reason is that as the Federal Reserve presumably begins to cut rates, the bond market is expected to become less volatile, leading to a slight decline in mortgage rates. The average 30-year fixed mortgage rate as of Thursday was 6.99%. By the final quarter of 2025, Fannie Mae expects that to slide to 6.0%.
What is the average interest rate on a money market account? ›
You will often find money market accounts that earn according to a balance tier. This simply means that your exact interest rate depends on your account balance, with higher balances usually earning at a higher rate. Average money market rates fall between 0.01% APY and 3.45% APY, again depending on your balance.
Is a money market account better than a savings account? ›
Savings accounts generally lack the minimum deposit and balance requirements many money market accounts have. However, money markets typically offer higher interest rates than regular savings accounts, letting you earn more on your saved money.
