Since March 2022, the Federal Reserve has raised the federal funds rate 11 times in an attempt to ease inflation. In fact, at their latest meeting, the Fed decided to once again raise rates by a quarter of a percentage point, bringing the federal funds rate, a key bank lending rate, to a target range of 5.25% to 5.5%, the highest it's been since 2001.
The Fed's hikes also mean mortgage rates, credit card APRs and interest rates on other types of loans have all gone up, putting a strain on borrowers' budgets. However, as interest rates continue to rise, so do savings rates. Rates for CDs have gone up with the Fed hikes, and some of the highest-earning 1-year CD accounts already offer an APY of over 5%, while some of the best 5-year CD rates are above 4%.
