How does a federal interest rate increase typically affect depositors?

A federal interest rate increase typically has a positive impact on savings accounts because banks often respond to higher rates by raising the interest rates offered on savings accounts and other deposit products. When the Federal Reserve raises interest rates, it generally means that the cost of borrowing increases, but it also means that the returns on savings accounts or fixed deposit products may improve as banks compete for depositors' funds. Higher savings account interest rates allow depositors to earn more on their deposits, providing an incentive to save rather than spend. This dynamic is beneficial for savers, as they can accumulate more interest on their funds over time.