How interest rates have changed even as the Fed holds steady

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Savings accounts

That top rate is considerably higher than the national average for savings rates overall, which has been just below 0.6% for the past two months. But even that overall average is more than double its level of 0.23% 12 months ago.

Rossman added that plenty of high-yield savings accounts, mostly available online, are still paying close to or even above 5%. These kinds of accounts keep money easily accessible while earning solid returns and are great options for emergency savings.

Certificates of deposit

Interest rates on savings accounts are higher than they’ve been in decades, but there has been recent softening in returns on certificates of deposit, data from the U.S. Federal Deposit Insurance Corp. shows.

The average yield on a 12-month certificate in March 2024 was 1.81%, down slightly from its high in December and January, according to the FDIC.

Despite the dip, CDs are good savings vehicles that avoid risk but still provide a return if you’re willing to tie up your money for a set period of time, Rossman said. The current environment will likely remain good for savers until the Federal Reserve initiates its rate cuts.

“There’s been remarkable stability at the top of this market, even though we expect cuts are coming,” he said. “These shorter-term rates don’t tend to move until the Fed moves.”

Until then, savers should take full advantage.

Credit cards

The key for consumers to remember is that credit card debt is expensive, and that will still be true even after the rate cutting starts, he said.

“The Fed is not going to come to your rescue on credit card rates,” Rossman said. “Even if rates fell a couple of points in a couple of years, they’d still be high.”

His best advice for consumers is to prioritize paying off credit card debt, if possible with the help of a balance transfer card, which lets consumers carry balances from one credit card to another for a low fee and an extended period of no or low interest.

The Fed is not going to come to your rescue on credit card rates.

Ted Rossman

Senior industry analyst, Bankrate

Rossman added the offers from balance transfer cards continue to be very favorable with low fees and generous repayment windows.

“The balance transfer market has been remarkably stable and strong,” he said. “It speaks to a strong job market and the strong economy. People are paying these bills back,” despite the fact that more consumers, on average, are carrying more expensive debt.

Mortgage rates

While savings and credit card rates are very sensitive to maneuvers from the Federal Reserve, the area that might see the most movement is housing.

“Unlike some of these other products, mortgage rates tend to move in advance of the Fed because they tend to track 10-year Treasurys,” Rossman said. “It’s more about investor expectations for the Fed and for economic growth.”

That’s reflected in the data. Mortgage rates peaked in October 2023 at about 8%, followed by a steady decline. And after a brief jump in February, they seem to be settling back to where they were at the beginning of 2024, when a 30-year fixed rate mortgage was about 6.6%.

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