Here’s the funny thing about interest rates: They affect how much you pay to borrow money, but also how much you can earn by saving money. So if you don’t need a loan, higher rates can actually be a good thing in many ways.

And that’s the situation we’re in right now. The Federal Reserve’s benchmark interest rate is high — higher than it’s been for most of the last two decades, with the exception of the past two years. Despite calls from the president to lower it, Fed officials aren’t expected to change it at their meeting today, and it’s unclear when they will.

A quick recap of how we got here: The Fed cut its rate — known as the fed funds rate — to virtually zero when the pandemic struck in 2020. Two years later, the central bank reversed course, cranking it up to a 22-year high in an effort to quash a major spike in inflation.

Last year, after inflation cooled, Fed officials backed off a bit, but have been wary of lowering the rate too much. New tariffs on imports have muddied the outlook on inflation, creating a lot of uncertainty about what will happen to prices from here.

Back to how this all affects you. Even though the fed funds rate doesn’t apply directly to consumer products, banks use it as the basis for setting both the rates they offer on savings accounts and the rates they charge on loans. (And yes, they are connected. Because banks use deposits to lend money, the more they charge borrowers, the more they can pay savers.)

So a higher fed funds rate means that borrowing in general will continue to be relatively expensive compared to a few years ago — bad news if you carry a credit card balance or are hoping to buy something big, like a house, this year. (There are other factors with mortgage rates, but the same fundamentals apply.)

Your savings, however, can benefit from these higher rates. Today’s highest-paying savings accounts feature a significantly higher APY than a few years ago, according to Investopedia. (SoFi’s high-yield savings account has an APY of up to 3.80%.)

The bottom line? It’s unclear when interest rates may come down — or by how much. And that’s not necessarily a bad thing, given how many Americans are prioritizing saving over spending these days. If you have money socked away, take advantage. There’s still time to give your money a boost with a high-yield savings or money market account.

SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 3.80% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

OTM2025073001