Understanding How the Federal Reserve Affects Savings Account Interest Rates

When the Federal Reserve changes interest rates, consumers feel the ripple effects in all sorts of ways.

For savers, banks offering top rates tend to pay more when the U.S. central bank hikes rates and less when it cuts them. The Fed raised the target for the federal funds rate by 25 basis points following its July meeting after a brief pause in June that was preceded by a long streak of rate hikes going back to 2022.

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