Borrowers of private student loans have already seen rates climb because of previous rate increases: Both fixed- and variable-rate loans are linked to benchmarks that track the federal funds rate.
With the Fed’s benchmark rate unchanged, savings account rates are expected to remain relatively steady. (A higher Fed rate often means that banks will pay more interest on their deposits, but that doesn’t always happen right away. They tend to pay more when they want to bring in more money.)
But now that rates might have peaked and could eventually drift lower, some online banks have already begun to lower rates on certificates of deposit, or C.D.s, which tend to track with similarly dated Treasury securities. Earlier this month, for example, the online banks Ally, Discover and Synchrony all reduced rates on their 12-month C.D.s to 5 percent from 5.15 to 5.30 percent. Marcus now pays 5.25 percent, down from 5.50 percent.
“It is a good time to lock into C.D.s.,” said Ken Tumin, founder of DepositAccounts.com, part of LendingTree. “C.D. rates are already falling, and as we move closer to the first rate cut, they will only go down more.”
The average one-year C.D. at online banks was 5.35 percent as of Jan. 1, up from 4.37 percent a year earlier, according to DepositAccounts.com.
The average yield on an online savings account was 4.49 percent as of Jan. 1, according to DepositAccounts.com, up from 3.31 percent a year ago. But yields on money-market funds offered by brokerage firms are even more alluring because they have tracked the federal funds rate more closely. The yield on the Crane 100 Money Fund Index, which tracks the largest money-market funds, was 5.17 percent on Jan.30.