Best Online Savings Rate Now at 1.80 Percent
The best online savings rate on our list hit another new high in 2018. The current best savings rate is now at 1.79 percent with an APY of 1.80 percent. We might see the highest savings rate hit 2.00 percent this month or next.
Just last month, the best savings rate was 15 basis points lower at 1.55 percent. In early January, the top rate was even lower at 1.50 percent. A 30 basis point increase in just over 2 months is nice to see and the good news is that rates will keep moving higher.
Best Online Savings Rate Poised to Move Higher
Savings rates, money market account rates, and CD rates will all continue to move higher for the rest of 2018. The driving force behind higher rates is that the Federal Open Market Committee will be increasing the federal funds rate.
Note: The federal funds rate is the central interest rate in the U.S. financial market. The federal funds rate influences other interest rates such as the prime rate, the rate banks charge their customers with higher credit ratings. Additionally, the federal funds rate indirectly influences longer-term interest rates such as mortgages, loans, and savings rates.
The FOMC is widely expected to increase the fed funds rate another 25 basis points this month. The CME Group's FedWatch Tool puts the probability of a rate hike at 88.8 percent. Another 25 basis point increase will put the fed funds rate in a range of 1.50 percent to 1.75 percent.
Banks will increase deposit rates because of the higher fed funds rate. The highest savings rates and money market rates will head towards 2.00 percent. The highest 1 year CD rates will likely go up to 2.25 percent to 2.35 percent, up from the current highest 1 year CD rate of 2.10 percent.
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