The Federal Reserve is raising interest rates yet again, announcing in early November that it’s increasing rates by .75 percentage points. This is the fourth consecutive time the Feds have raised rates in an attempt to counter the historic inflation the country is experiencing.
The higher-than-normal inflation is the result of the perfect storm of supply chain hiccups and shortages, the COVID pandemic, overspending from stimulus checks, and Russia invading Ukraine. The latter impacted gas and food supplies and drove up costs as a result.
While the Feds try to find a solution to the skyrocketing cost of living, it comes at a price for all of us. Not only do the higher rates hit our pocketbooks, but the hike increases the likelihood of a recession, something that’s been looming since the world shut down in 2020. So, is there any silver lining to this increase? There’s one: savings accounts.
The one good thing about the Federal Reserve’s decision to raise rates is that savings accounts are paying higher rates, as well. Many typical accounts may still be paying around 1% as they normally do, but high-yield accounts are paying 3% or more. This means it’s a good time to open a savings account and see what options work best for you.
Of course, there are other reasons to open a savings account in addition to the returns. Savings accounts are an essential part of financial planning, there are few requirements to start one, they offer a unique digital experience when banking online, and you can easily link them to other accounts, such as your checking account.
The Federal Reserve will raise rates whether any of us like it or not, but opening a savings account can make that increase work for you, one deposit at a time.
By Michaela Phillips. Michaela is the Senior Lender for Synergy One Lending in Boulder. She enjoys teaching her clients the pros and cons of being a Real Estate Investor. Contact Michaela at 303.579.5517, e-mail [email protected] or visit michaelaphillips.com. NMLS: 312874.