The highest savings interest rates today are around 5% — about 10 times what they were two years ago. The elevated bank yields have been good for savers. But will rates continue to climb? Or is this the year they start to fall?

We can’t predict the future with 100% certainty. Or any certainty, really. But by looking at how saving rates are affected by greater economic factors and how they’ve moved historically, we can help you know what the possibilities are so you can make smart money moves.

Are rates going up?

Rates currently are not going up. The federal funds rate, a key benchmark that tends to affect savings account rates, has remained unchanged since hitting a two-decade high in July 2023. It currently sits at a target range of 5.25% to 5.50%.

The Federal Reserve raises or lowers this rate in response to macroeconomic conditions, and throughout 2022 and the first half of 2023, it boosted the federal funds rate to fight inflation.

In addition to helping ease inflation, a high-rate environment also encourages banks to offer more competitive yields on savings accounts to attract customer deposits. So savings rates begin to climb. That’s why high-yield savings accounts now have annual percentage yields of around 5%, compared with APYs of 0.50% two years ago.

While inflation remains a concern, market conditions suggest it is easing. The consumer price index, widely seen as a measure of inflation, increased 3.2% year over year for February 2024. This is much closer to the Fed’s 2% target for inflation than it was back in February 2023, when the year-over-year increase was 6%.

In remarks given after the Fed’s rate announcement in January, Federal Reserve Chair Jerome Powell indicated that rates could fall later this year, barring an economic surprise. “We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” he said.

When will savings interest rates go down?

When the federal funds rate does drop, savings rates are likely to follow. In the wake of Powell’s remarks, market experts project that the federal funds rate is bound to fall, potentially as early as June. This comes from a consensus of analyst predictions for Fed rate changes, known as the CME FedWatch Tool, as of March 13. But keep in mind that these are just predictions.

While a few institutions have been the exception and raised their savings rates in recent months even as the Fed rate has remained unchanged (likely for competitive reasons), others already have begun lowering their savings APYs. The national average savings account rate, which is calculated from rates at federally insured banks and credit unions, recently fell from 0.47% in January to 0.46% in February, the first dip since 2021.

How to maximize your savings rate for the future

Despite the looming possibility of falling savings rates, you can still take steps to earn as much interest as possible.

Shop around for the highest yields. If your savings is earning less than 4% or 5% APY, you have room for improvement. Accounts that pay high yields now will likely offer the best rates around when rates fall. A higher rate could go a long way toward keeping your money growing.

For example, say you have a savings account with $5,000 and it earns a low 0.01% interest rate, which is what some of the largest banks pay, regardless of whether yields elsewhere are rising or falling. If you leave that money in your account for two years earning that same rate, you’d gain just a dollar in interest.

Now suppose you put $5,000 in a high-yield savings account that earns a 5% rate for the first year, but then the yield falls to 3% for the second year due to a decreasing rate environment. That account would earn about $255 in interest in the first year and about $160 in the second year, giving you a balance of a little more than $5,415. Even with a rate drop, you end up with more than the $5,001 in the first example. (You can use a savings calculator to run more scenarios.)

Consider a certificate of deposit. CDs guarantee savings rates for a specific time period. In return, you can’t make withdrawals during the term without a penalty (such as a few months of interest). Some CDs have APYs that are better than even the highest savings yields. If you open one, you can lock in today’s rates to protect against future rate drops.

Regardless of how rates move in the near future, it’s important to find the best possible place to park your savings now. By taking proactive steps to earn a high yield, you can help ensure your bank balance continues to grow.