When the Federal Reserve changes interest rates, consumers feel the ripple effects in all sorts of ways.

For savers, banks offering top rates tend to pay more when the U.S. central bank hikes rates and less when it cuts them. The Fed decided at its September meeting to forgo a rate hike, effectively keeping the federal funds rate in a range between 5.25-5.5 percent. This was preceded by 25-basis-point increases in July, May, March and January, as well as another pause in June. In all, the Fed has hiked rates 11 times since March 2022.

“Going forward, savers will benefit more from a decline in inflation than further increases in interest rates, which are pretty close to peaking,” says Greg McBride, CFA, Bankrate chief financial analyst. “But where you have your cash parked really matters. The top-yielding savings accounts and certificates of deposit remain the place to be as those are the banks that have raised their payouts in an effort to remain competitive for savers’ money. But many banks — and especially large banks — have been much stingier about passing along higher rates to savers.”

For anyone hoping to make saving money a top priority, here’s what to consider when the Fed makes a change to the federal funds rate.

The loose link between Fed rate hikes and your high-yield savings account

Congress mandates the Fed maintain economic and financial stability. The central bank mostly does so by raising or lowering the cost of borrowing money. Savings account rates are loosely linked to the rates the Fed sets. After the central bank raises its rate, financial institutions tend to pay more interest on high-yield savings accounts to stay competitive and attract deposits.

The fed funds rate was taken all the way down to a range of zero to 0.25 percent in March 2020 in response to the worldwide COVID-19 pandemic. But 40-year-high inflation prompted the Fed to raise rates in 2022 by 4.25 percentage points over seven meetings throughout the year, including four hikes of 0.75 percentage points each. Prior to this July’s 0.25-percentage-point move, three other hikes of the same size took effect in 2023.

This latest pause in rate increases comes at a time when the annual inflation rate has decreased significantly and wages have been rising faster than inflation. However, the Fed has two more opportunities to raise rates before the end of the year — with meetings in November and December — should it choose to do so.

The ripple effects of rate hikes don’t always hit your wallet right away. Online banks tend to compete for customers with comparatively high rates, while brick-and-mortar banks tend to avoid paying savers competitive yields. The rates on savings accounts vary drastically, and they can change at any time. Large brick-and-mortar banks, such as Chase and Bank of America, are still paying around 0.01 percent annual percentage yield (APY), while top high-yield savings accounts offer around 5 percent APY — or 500 times more.

Escalating competition is one reason for the disparity in yields. Online banks are in hot pursuit to attract and keep deposits as fintech competitors continue to enter the marketplace. Offering a high-yield account is among the tried-and-true strategies to court customers with a compelling offer — especially for relatively new and small digital banks.

Deposits, in general, are essential to banks’ business models: They are used as a low-cost funding source to fuel loan demand.

“Bankers don’t get deposits just because it’s cool to have deposits,” says Neil Stanley, CEO and founder of The CorePoint, a bank management services company. “They get them because they can invest them in loans.”

If banks make money by investing deposits in loans, then they can afford to pay more for deposits. Spoiler alert: banks are (usually) profitable.

Not every bank is hungry for more deposits. Whether and when banks respond to the Fed changing the rate will vary based on what objectives they are trying to accomplish. Online banks — which are often hungry for deposits — are likely to follow suit when the Fed raises rates, while established brick-and-mortar banks often don’t keep up with Fed rate hikes by raising their own savings account rates.

“Every bank could be a little different on this in terms of what their pressures are,” says Betty Cowell, a senior advisor at consultant firm Simon-Kucher & Partners.

How to maximize your savings rate

Though the average yield on a traditional savings account is a paltry 0.56 percent, some banks offer high-yield savings accounts paying around 5 percent APY — or nearly 10 times more. These accounts won’t do much to counter high prices at the pump and grocery store, but they will help you earn something.

“With online savings accounts yielding 5 percent or more, your emergency fund is no longer a drag on your portfolio,” says McBride. “Although the primary benefit of emergency savings is the immediate access to cash that shields you from high-cost debt or forced asset sales when unplanned expenses arise, you’re being compensated for that savings in a way you haven’t for more than 15 years.”

Online banks are known for offering the highest yields, but it pays to shop around. Also, consider cash management accounts and money market accounts to find the best deals. If you’re able to park your cash for a set period, consider a short-term CD.

“For investors looking for predictable interest income, CDs will provide that and without the price volatility and default concerns that many bonds have,” says McBride. “Just don’t compromise your emergency savings to chase yield in a CD unless the bank is offering a way to cash in early without penalty should the money be needed.”

As you look for the best offers, read the fine print about fees and minimum balances, and check that the account offers the features you need.

“If you are a shopper in the market today,” says Simon-Kucher’s Cowell, “hop online and compare prices and go with the brand you trust.”