If You Have a High-Yield Savings Account, Mark This Important Date on Your Calendar

High-yield savings accounts with interest rates well above 4% can readily be found from reputable financial institutions, but there's some uncertainty surrounding how much longer that will last.

Specifically, the Federal Reserve cut its benchmark interest rate for the first time in more than four years in September, and this already has sent many high-yield savings account interest rates lower. The Fed is set to meet again very soon, with its next interest rate decision set to be announced following that meeting's conclusion on Nov. 7.

To be perfectly clear, there is no direct relationship between the interest rates paid by high-yield savings accounts and the Fed's interest rate moves. However, the latter affects the cost of borrowing money for banks, and as a result, the two tend to move in the same direction. As I'm writing this, the federal funds rate is set to a target range of 4.75%-5.00%, and it isn't a coincidence that the highest-paying savings accounts on our radar have rates very close to that range.

With that in mind, here's what the most recent expectations for the upcoming Federal Reserve meeting are, and what it could mean for your high-yield savings account.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 29, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 29, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

If you're looking to lock in today's high interest rates before the Fed cuts any further, click here for today's top CD rates.

The latest Fed expectations

Over the past few weeks, expectations have clearly shifted in favor of an additional rate cut in November. According to the CME FedWatch tool, which tells us the interest rate expectations priced into financial markets, the median expectation is for a 25-basis-point rate cut (0.25%). In fact, the tool estimates that there is now a more than 96% probability of this happening.

This has shifted in recent weeks. In fact, just one week ago, there was a 14% chance of no rate cut at all.

A quarter-percent rate cut would be less aggressive than the half-percent cut the Fed made in September, but it is consistent with the Fed's own expectations. Along with its September interest rate cut, the policymakers also released their economic projections.

The projection of Federal Reserve Board members called for another 50-basis-points of rate cuts before the end of 2024, and with two meetings to go (there's another in mid-December), one rate cut at each remaining meeting would certainly make sense.

What it could mean for your high-yield savings account

If the Fed cuts rates by a quarter of a percentage point as it's expected to do, it would be reasonable to expect high-yield savings and money market account interest rates to fall by this amount or slightly less. As a personal example, when the Fed lowered interest rates by 50 basis points in September, my HYSA's rate fell by 30 basis points soon after.

It's also worth noting that this is just the beginning of an expected rate-cutting cycle. The policymakers in the Fed foresee another full percentage point of rate cuts in 2025 and even more in 2026.

Of course, because there is no direct link between the benchmark rates set by the Fed and your savings account interest rate, there's no way to know for sure what your bank will do. Some might choose to keep their rates higher for longer as a way to attract new customers during the rate-cutting cycle.

But the bottom line is that the Fed's decision in November is more than likely going to be reflected in the interest rates paid by the top online banks.