What's the savings account interest rate forecast for May 2025?

There's a lot of economic uncertainty these days. The stock market is volatile, proposed economic policies threaten to send consumer prices higher and stubborn inflation has remained above the Federal Reserve's goal of 2%. Because of this, the Fed has pulled back on its rate cutting as of late. While that's not great if you're looking to borrow cash, for savers, it can be beneficial as it keeps rates on savings accounts and certificates of deposit (CDs) propped up for the time being.

"Over the previous two quarters, the rate trend for savings accounts has generally been flat for both standard financial institutions — credit unions and banks — and financial technology companies," says A'Jha Tucker, product manager for consumer deposits at Georgia's Own Credit Union.

The Fed still has six meetings left on the 2025 calendar, though, with one scheduled for this week. So what could the Fed's upcoming rate decision and the other factors that are looming mean for savings rates in the near term? 

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What's the savings account interest rate forecast for May 2025?

Here's what experts project will happen with savings account rates over the short term.

Savings account rates will hold steady for now

For the most part, experts predict rates will hold steady for a while. The Federal Reserve has indicated it's taking a slower, wait-and-see approach to rate cuts, and according to the CME Group's FedWatch Tool, the likelihood of a rate cut in May is extremely low, clocking in at about 3% as of May 6, 2025.

"On May 6, the Federal Reserve is scheduled to meet and discuss the economy and rates," says Eric Elkins, CEO of Double E, a financial services and insurance firm. "Some analysts believe rates will remain unchanged, and if that does occur, I would expect savings account yields to resemble what they are today."

According to the Federal Deposit Insurance Corp., that's an average rate of 0.41% on a traditional savings account, 1.77% on a 1-year CD, and 0.62% on a money market account. 

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Saving account rates could fall after that

As of now, the Federal Reserve's economic projections show a likelihood of two rate cuts by the end of the year. The timing of those cuts will depend on inflation and other economic factors, but CMEGroup's tool shows a good chance of potential rate drops at both the Fed's summer meetings, which are slated to be held in June and July.

"The market does not expect a rate cut at the next FOMC meeting, but additional rate cuts are anticipated over the course of the year," says Shana Hennigan, chief business officer at savings account marketplace Raisin. "As banks respond to these macroeconomic signals, consumers can likely expect corresponding decreases in savings account yields."

The decrease likely won't be huge, though. For context, look to the last rate cut the Fed made in December 2024, when it reduced rates from a 4.50% to 4.75% range to the 4.25% to 4.50% range it's at today. In the month following, the average rate on savings accounts fell — but only slightly. The average rate on a savings account was 0.42% in December. By mid-January, it was just 0.41% and has stayed there ever since.

"For rates to drop significantly, we would expect to see a significant decrease in inflation, reducing the need for higher interest rates," Hennigan says. "Another possibility would be an economic downturn, prompting banks to lower rates to encourage borrowing."

Savings accounts could also rise

The Fed makes its decision based on economic data, and that is all up in the air right now, especially with hefty international tariffs hanging in the balance. While many of those are on pause temporarily, should they go into effect, they could have a big impact on inflation and, therefore, the Fed's actions. (Typically, the Fed will raise rates in inflationary times to slow the inflow of money into the U.S. economy.)

"If the tariff handcuffs come off in May and the U.S. imposes the 145% tariffs on China imports, then l believe consumers could see yields on savings accounts from 4.75% to as high as 7% before the end of the year," Elkins says. "I would also expect inflation to go from 2.5% today to as high as 7% before end of year."

As Elkins puts it, "Don't assume high savings account yields are necessarily a good thing."

The bottom line

With interest rates uncertain, choosing the right savings product is going to be vital this year. To maximize what your savings earn, look to high-yield savings accounts before traditional ones. While the standard savings account only offers rates averaging 0.41% right now, there are many banks offering high-yield options with rates much higher (over 4% if you shop around!)

You can also "explore a high-yield CD, especially if there is a low probability you would need to withdraw any funds before its maturity," Tucker says. "Although savings account rates are not currently fluctuating, there is the risk of them dropping at any moment and on a more frequent basis compared to a CD, where the rate offered is fixed until its maturity."

With a CD, you get to lock in today's rates for a long period. Right now, 12-month CDs offer the highest average rates at 1.77%, with six-month CDs close behind at 1.60%. Again, though, some banks offer much higher than this, so shop around, being sure to include a good mix of banks in the process. "Consider local community banks or credit unions," Elkins says. "They will, a lot of times, offer higher yields than bigger banks because they are trying to grow."

And finally, if you already have a savings account, take a minute to see what your current rate is. Then, compare it to other options that are on the market. As Hennigan puts it, "if better rates are out there, don't be afraid to move your money. It can feel overwhelming to do the research, make a decision, open a new account, and make your money work for you. But taking action now can equate to thousands of dollars in compounding interest over time."