What Rising Rates Mean for Your Savings

When the Federal Reserve holds benchmark rates at elevated levels, banks compete aggressively for deposits. That competition is the engine behind the headline APYs you see on high-yield savings accounts and certificates of deposit.

Why rates move

Banks fund their lending with deposits. When the Fed Funds rate rises, the cost of holding cash rises too, so banks pay more to attract the deposits that back their loan books.

What to do now

• Compare APYs across at least three institutions.
• Lock a CD ladder so part of your cash earns today's rate while staying liquid at intervals.
• Keep an emergency fund in a high-yield savings account, not a checking account.