Most big banks adjust their payouts based on the Fed’s actions, so a cut from the Fed typically means less money for savers.

And according to Edward Moya, senior market analyst with OANDA, the current low rates aren’t going away anytime soon.

“The Fed has pretty much signaled a lower interest rate environment is here to stay,” says Moya. “Even when economic activity comes back to normal and the economy is on firmer footing over the next couple years, interest rates will remain stubbornly low.”

Thankfully, the Fed isn’t the only thing factor that can influence your savings rate.

The competition among digital banks for new customers is extremely high right now, and if you’re savvy about where you stash your nest egg it’s still possible to find a decent rate.

How to get the most from your savings

Landing an account with a high interest rate is key if you want your savings to grow over time.

Traditional savings accounts only have an average yield of around 0.1%, but by looking around you may be able to find an account that pays 1.0% APY or more. That’s at least 10 times as much as you’d earn with one of the big banks.

When searching online for offers from digital banks, don’t just jump at the first one that pops up. Take some time to read over the terms and conditions, and check to see whether there are maintenance fees or minimum balances you need to hit.

You might also want to look into a money management account, which combines checking and savings into one account. Some even offer cash back on purchases, so you can earn money while you save and while you spend.

Finding the right account for your needs might take some legwork, but it will be worth it — especially since the state of the economy is still so uncertain.

Most financial advisers recommend keeping enough emergency savings stockpiled to cover at least six months of your normal expenses.

By parking your emergency fund in an account with a higher interest rate, your savings will have a chance to grow. That way you’ll have more money stashed away for when you need it most.

About the Author

Shane Murphy

Shane Murphy


Shane is a reporter for MoneyWise. He holds a bachelor’s degree in English Language & Literature from Western University and is a graduate of the Algonquin College Scriptwriting program.

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