By the End of the Year, the Interest Rate on the Savings Account May Exceed 2%

The Federal Reserve is expected to hike short-term interest rates three times in 2018, which is good news for depositors.

The hikes could lead to improved savings and CD rates, including some savings accounts yielding around 2.3% and 5-year CDs reaching 3% by the end of the year, according to Bankrate . It won’t make you rich, but this is an update from 2017 when high yielding accounts peaked at 1.4%.

Remember, these will be the best deals – the averages will be lower, so you’ll want to look at them. You can do this with Bankrate or NerdWallet , which compare accounts in real time (you’ll want to note the minimum accounts and other requirements).

Another important thing to keep in mind is that as interest rates rise, borrowing will become more expensive in 2018, which you should be aware of especially if you have credit card debt or have taken out a line of credit for home equity.

If you have a variable interest rate credit card, you can potentially avoid additional interest by signing up for a balance transfer card, which allows you to pay the principal amount free of interest within a set period of time. If you do, here are a few things to consider for your credit score :

  • You usually need good credit to qualify for a translation.
  • You will likely pay a flat fee to transfer your balance (usually a percentage of your balance).
  • Balance transfers will save you from paying interest over a period of time, but they will not forgive your debt.
  • You may not be able to transfer all of your debt.
  • Watch for a jump in annuals after the end of the introductory period.

You will likely see these rate hikes before your savings account or CD rate increases. So if you haven’t made a decision for the new year yet, consider paying off debt as a top priority before rates rise.

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