The Federal Reserve left interest rates unchanged at its June meeting. Looking ahead, don't expect a rate cut anytime soon, either. CME FedWatch projects the Fed is likely to keep rates steady again at its July meeting.

The concern about elevated inflation risks, stemming from higher oil costs, suggests that long-term interest rates will likely remain high, as noted by David Payne of the Kiplinger Letter. Even with a resolution for the Iranian conflict, prices won't drop overnight.

For consumers, the Fed's decision has mixed impacts. While it helps savers by keeping annual percentage yields (APYs) higher on savings accounts, it poses a challenge for those carrying debt or needing to borrow for upcoming purchases. I'll explain how this policy can increase borrowing costs, as well as ways to borrow money and avoid higher rates.

How the Fed's decision impacts your credit card APRs, auto loans

The Fed's decision has different implications, depending on the kind of credit you have/want. To illustrate, the annual percentage rate (APR) on credit cards is directly tied to the prime rate.

What is the prime rate? It's the benchmark that banks use to determine how much customers pay for lending products, such as credit cards, auto or personal loans. Since the prime rate is set at the federal funds rate plus 3%, no movement means credit card rates will remain high.

The current average APR on credit cards is 19.56%, per Bankrate. This means if you're carrying a balance of $10,000 and you only make the minimum payment, of around $225, it will take you 81 months to pay it off. It can lead to a hidden cost of more than $8,000 in interest, almost doubling the balance owed.

Meanwhile, lenders will use the prime rate as part of determining the rate you'll pay on an auto loan. If the Fed raised interest rates, it would increase the APR you'll pay for car financing, which could add hundreds to thousands more in total loan costs.

Other factors will also shape what you pay. Your credit score plays a major role, along with the vehicle itself (its make, model and age) and the length of your loan term, all of which lenders use to determine your final rate and total cost.

Does Fed policy impact mortgage rates?

Not directly, as with auto loans or credit cards, but it does play a small part. For longer-term loans, such as fixed-rate mortgages, the 10-year Treasury yield is a better indicator of what you'll pay.

As its name implies, this yield is the government's borrowing cost for a decade. It's a better benchmark because the average homeowner stays in their home around that long, or they'll refinance somewhere along the way.

Who or what influences the yield? Primarily, it's investors who buy mortgage-backed securities. Their expectations on short-term interest rates have an impact because risks are elevated with longer-term investments.

Furthermore, other factors could influence the yield. When inflation becomes higher, as it is now, the 10-year Treasury yield rises. Inflation is currently 4.45%, showing investors are worried about how gas prices will impact the economy.

Another factor is economic policies. When the Fed sets the federal funds rate, it can give investors a window into the future. Holding rates steady could lead to a murky future, in which a wait-and-see approach is best. When confidence in the economy wanes, investors might require higher rates to feel comfortable with their risk.

Is now a smart time to borrow money?

It will be more expensive, but there are things you can do to lower your borrowing costs, depending on your situation:

If you're carrying high-interest debt

With everyday prices rising, it's common for some borrowers to pay the minimum each month. It's frustrating because even though you're making a payment, it doesn't make a dent in your balance.

This is where transferring that debt to a balance transfer credit card with 0% APR can help. Some cards offer generous 0% APR periods of up to 21 months, giving you almost two years to pay down that balance.

There are a few things to consider before taking this approach: Transferring your balance isn't free; usually, lenders charge 3% to 5% of the balance. Some of these cards come with annual fees, which can also take away from your ability to pay off your debt more quickly.

If you decide to go with this approach, I recommend paying as much as you can each month, which can significantly reduce your debt before the introductory period ends. You'll save in interest and take years off your debt repayment. If you have other debts, this can build momentum to help you tackle them next.

You need to make a bigger purchase, but don't have the cash

If you have an immediate need and don't have the cash on hand, it makes sense to consider credit. But there are smarter approaches than using whatever credit card is in your wallet.

To demonstrate, I don't usually recommend store credit cards. They come with sky-high APRs, but if you shop at the same store regularly (Costco, Lowe's, etc.), you might be missing out on some really sweet card perks.

To demonstrate, Costco's Anywhere Visa by Citi offers 5% back on the first $7,000 charged at Costco gas stations. You'll also earn 2% back on Costco purchases. We made this switch because it allowed us to earn cash back on larger purchases and save on everyday costs, such as gas, prescriptions and groceries.

Other store credit cards offer generous interest-free promotional periods from six months to a year. I use these when buying larger appliances. As long as you pay it off within that promotional window, you won't have to incur the higher interest rates.

That said, if your purchase isn't urgent, it might be worth taking a step back and saving first. Even setting aside a portion of the cost can make a difference. Every dollar you pay upfront is one less you'll finance, helping reduce your total interest costs.

One simple way to do this is to treat your savings like a monthly bill. Set aside a fixed amount in your budget and transfer it from your checking account into a high-yield savings account. This creates a consistent habit while allowing your money to grow, with some accounts offering rates up to 4.20% APY.

Use the Bankrate tool below to find the best fit for your needs:

How to use the Fed's decision to your advantage

Ultimately, the Federal Reserve holding rates steady is good news if you’re focused on building savings. But if you’re carrying debt or planning a large purchase, borrowing costs will remain elevated.

To manage that, consider using promotional financing offers, transferring balances to cards with 0% introductory APR periods or delaying the purchase and saving in a high-yield account to take advantage of today’s higher rates while you work toward your goal.

Related content

• How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2026
• After the Fed Meeting, 7 High-Yield Savings Accounts Worth Your While
• Kiplinger Interest Rates Outlook: Long-term Rates to Remain Elevated as Long as Oil Prices Cause Inflation Risk

Most Americans are keeping their cash in the wrong place — and they are paying for it in lost interest.

With more than $18 trillion in bank deposits right now and an average savings account rate of 0.4%, Americans are missing out on billions of dollars of interest they deserve.

With the latest Federal Reserve rate cut, and the expectation of further cuts in 2026, now is the time to make sure you are getting the best rates on your bank money — and perhaps even locking in some of those rates if the timing is right for you.

If you're not getting close to 4% on your cash, read on to learn how you can get hundreds, if not thousands more in interest each year by finding the right account, with the best rate, for you.

You're going to see two accounts you're quite familiar with, but probably not making the best use of. You're going to learn about a type of account you probably haven't used before. And I'm going to show you the number one problem I see when you start earning extra interest.

Before that, you need to remember the most important rule of investing.

The most important investing rule

The most important factor in your investment decisions is to determine when you need the money. I highlight the importance of splitting your money between short-term and long-term buckets in my book, Retire Today.

Let's break that short-term bucket into three different time frames: Right now, sooner or later.

High-yield savings accounts — for your 'right now' money

If you need money available at the drop of a hat, that's money you need right now. Perhaps you keep money in a savings account, and that's what you use to pay your mortgage or car loan. Perhaps you want your emergency fund available whenever you might need it. The best solution here is often a high-yield savings account.

What's great about high-yield savings accounts is that they are just as safe and available as the savings account at your regular bank, but often pay eight to 10 times as much interest.

In December 2024, I helped a new client move $100,000 from their bank, where it was earning 0.4% interest, to a high yield savings account that averaged 3.8% throughout 2025. They earned $3,400 in extra interest in 2025 just by clicking a few buttons.

Kiplinger keeps track of the best high-yield savings accounts each month and the top rates are still above 4%.

You deserve to get more interest on your bank money, and linking your checking account to a high-yield savings account is a great way to keep the money available yet earn much higher interest than average.

Once you have one to three months' worth of expenses set aside in a high-yield savings account, you may want to start looking for higher interest or perhaps lock in interest rates so that you're not worried about your savings accounts rates going down when the Fed cuts interest rates.

That's where your sooner money comes in with certificates of deposit (CDs).

CDs — for your 'need it soon' money

When you have more than you need in savings, it's time to start looking at CDs.

The key here is to make sure you're buying a CD based on when you need the money. Often, you'll set up CDs for money that you expect to use in perhaps six months to three to five years from now.

Kiplinger tracks CD rates each month, and you can still get roughly 4% on CDs right now. The positive with CDs is that you know what interest rate you'll be getting for a specific length of time, compared to savings account rates that could change at any moment.

The downside is that you are locked in and will likely pay a penalty for cashing in your CD early. That's why you usually don't buy CDs until you have enough in your high-yield savings account, or set up what's known as a CD ladder.

The CD ladder helps you keep higher rates in the event of Fed cuts, as well as making sure you can access money soon, without a penalty, if you need it.

After you have enough cash in your high-yield savings and CD ladder for the next few years, you may have money left over. If you don't want to invest into the stock market, you'll still want to get a high guaranteed interest rate.

That's where the next level, "need it later" money, comes in.

Multi-year guaranteed annuities — for your 'need it later' money

Chances are you have a strong opinion about the word annuity — and chances are that opinion is not based on multi-year guaranteed annuities (MYGAs).

MYGAs are quite similar to CDs in that they offer a guaranteed interest rate over a set period, but there are a few key distinctions:

• CDs are issued by banks and backed by the Federal Deposit Insurance Corporation (FDIC) at the federal level. MYGAs are issued by insurance companies and are backed by insurance guaranty associations at the state level. The coverage amounts vary per state. Make sure you research your state's guaranty coverage before buying a MYGA.
• Both CDs and MYGAs have early-withdrawal penalties, although CDs are much less severe — often only three to six months of interest as a penalty. MYGA early withdrawal penalties are often 7% to 9% of the value that you take out early. MYGAs often allow you to withdraw 5% to 10% of the value each year, if you need it, while CDs might not allow you to access any of your money early without a penalty — or perhaps just the interest you've earned that year.
• Where MYGAs shine is the interest rate, which is quite often 1 percentage point higher than you could get in a similar-length CD.

There's another caveat, and benefit, when it comes to MYGAs: They are tax-deferred, which means you delay paying taxes on the interest you earn. However, if you cash them in before you turn 59½, you pay a 10% penalty on the interest earned.

MYGAs are generally best for people who are past 59½, have plenty of readily available money in high-yield savings accounts and are willing to accept potentially higher early withdrawal penalties in exchange for the tax deferral and the higher interest rates.

Now that you're earning all this extra interest, you'll likely face a new problem – extra taxes.

More interest = more taxes

The number one problem with getting more interest is that interest-rate-type accounts often report interest, but almost never withhold interest.

One advantage of the MYGAs listed above is that they are tax-deferred, so you won't have to pay taxes on the interest until you take the money out.

However, withdrawals from annuities, including MYGAs, come with a 10% early-withdrawal penalty if you take the money out before age 59½.

The extra interest you earn from high-yield savings accounts and CDs doesn't have a 10% pre-59½ early withdrawal penalty, but you will have to report and pay taxes on the interest you earned during the year, even if you didn't use the money.

Make sure your tax preparer or financial adviser knows that you're earning extra interest from your smart money decisions this year.

They are likely to suggest that you either do quarterly estimated tax payments or withhold extra from your paycheck so that you don't end up with an underpayment tax penalty. They might even suggest you use your IRA, especially your RMD payments, to do extra tax withholding.

Three basic steps to follow

You deserve to get as much interest as you can on your bank money. Follow these three steps to get more interest and avoid a tax surprise down the line:

• Decide whether you need your money available right now, sooner or later
• Find the best interest account for when you need your money
• Plan for the extra taxes so they don't surprise you at tax time

Don't spend another year earning less than you deserve on your bank money. Who knows, maybe this year's extra interest will pay for next winter's tropical vacation.

Related Content

• Where to Stash Cash as Yields Fall, According to Advisers
• Where to Move Your Money Before the Next Fed Meeting
• Confused by Annuities? Making Sense of the Different Types
• How to Give Your Kids Cash Gifts Without Triggering IRS Paperwork
• 5 RMD Mistakes That Could Cost You Big-Time: Even Seasoned Retirees Slip Up

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The ripple effects of each Federal Reserve meeting reach far beyond Wall Street. They shape the rate on your mortgage, the growth of your savings, and even the value of long-term investments.

Ahead of the September Fed meeting, mortgage rates dropped to their lowest level since October 2024. The average 30-year fixed rate slipped below 6.5% for the first time in months, thanks to cooling inflation and growing confidence that the Fed may begin cutting rates in the coming quarter.

The reaction was immediate: refinance applications spiked nearly 60% last week — the sharpest increase in more than two years. As rates shift, understanding who stands to benefit and who may lose ground is the first step in adjusting your financial strategy.

The big winners: Homeowners and buyers

Falling mortgage rates are a welcome break for homeowners who took out mortgages during the peak-rate periods of 2022 and 2023. For those with rates above 7%, today’s environment opens the door to consider refinancing into lower monthly payments.

That relief can free up hundreds of dollars per month, offering a much-needed buffer against other rising costs like groceries, insurance and energy.

Homebuyers also stand to benefit, at least in theory. Lower rates slightly boost affordability by reducing monthly payment burdens, making it easier to qualify for a mortgage. However, inventory remains tight in many markets, and prices are still elevated. This means buyers may find some relief but not a complete reset of the housing affordability crunch.

Curious about today's rates? Explore and compare some of today's best offers with the tool below, powered by Bankrate:

The losers: Banks, investors and savers

Not everyone wins when rates fall. Banks and investors holding older mortgage-backed securities (MBS) face losses as new loans enter the market at lower yields. As older, higher-interest loans get refinanced, the value of those securities drops, reducing bank profitability and potentially affecting investor portfolios with heavy exposure to mortgage debt.

Savers, too, may feel the downside. If the Fed signals a pivot to rate cuts in response to softening inflation and economic data, banks will likely lower yields on CDs and high-yield savings accounts.

For consumers relying on those accounts for a reasonable return, the recent gains in interest income may start to decrease. The era of 5% savings rates could be short-lived if broader rate cuts materialize.

Browse some of today's best savings account offers with the tool below, powered by Bankrate:

What it means for your financial strategy

When interest rates shift up or down, it sends a ripple effect across nearly every aspect of your personal finances. That’s especially true when mortgage rates move sharply. If you're a homeowner, a buyer, or someone with money in savings, now’s the time to pause and ask: What should I do differently?

Here are a few options to consider.

Refinance math: When it makes sense.

If you have a mortgage with an interest rate at least one percentage point higher than current offerings, now is the time to run the numbers. Just make sure you factor in closing costs, loan term changes and how long you plan to stay in the home. Refinancing isn’t always a slam dunk, but for many, it could mean real monthly savings.

Diversifying savings if yields fall.

If CD and high-yield account rates start to decline, look into laddering strategies or short-term Treasury bills to lock in higher yields while they last. Consider moving a portion of savings into I-bonds or other inflation-protected assets if you’re worried about losing ground.

Big picture: why every rate move creates both opportunity and trade-offs.

Whether you’re a homeowner, a saver or an investor, every rate change reshapes your financial landscape. With another decision coming in October, now is the time to revisit your strategy, weigh the trade-offs between borrowing and saving and make adjustments that support your long-term goals.

Falling mortgage rates can provide relief for homeowners and buyers but they also bring challenges for savers and financial institutions. Instead of seeing these shifts as purely good or bad, treat them as a signal to reassess and realign your money decisions.

Related Content:

• My Mortgage Rate is 6.5%. Should I Refinance If Rates Fall By Half a Point 
• Find the Best 30-Year Mortgage Rates Today
• How Much Does It Cost to Refinance a Mortgage and Other Questions to Consider

It’s normal for the stock market to move up and down, but as you get into retirement, the last thing you want to do is lose money you’ve worked hard to save.

Recently, headlines about tariffs rattled the market, triggering a sharp drop in stocks. However, markets quickly rebounded after President Donald Trump announced a 90 day pause on the tariffs, easing fears of an immediate economic slowdown.

Still, for those nearing retirement, even short-term volatility can be unsettling, especially if the recovery doesn’t align with your retirement timeline.

If you're close to retiring or feeling uneasy about how market swings could impact your investments, now might be the right time to reassess your portfolio.

There are no-risk and low-risk options that can help protect your savings while still offering potential for modest growth. If you’re worried about volatility eating into your nest egg, here’s what to consider doing with your money instead.

1. High-yield savings accounts

A high-yield savings account, or HYSA, is a savings account that earns a much higher yield than a traditional savings account. HYSAs are commonly offered by online banks rather than brick-and-mortar locations but there’s no set standard for what financial institutions offer them.

These accounts are typically insured by the Federal Deposit Insurance Corp., or FDIC, up to $250,000 per depositor, per institution. They offer easy access to your funds, and eligibility requirements vary depending on the bank or credit union.

For example, many credit unions require membership before you can open an account. Accessing your money is fairly easy since most institutions have partnerships with ATMs nationwide where you can get your money for free or make transfers to other bank accounts.

HYSAs are savings accounts, not investments, so you won’t gain as much money as a traditional investment would. But you won’t lose any money from a HYSA, either.

Keep in mind that while the APY is much higher than traditional savings accounts, it still changes whenever the financial institution deems it necessary.

2. Certificates of Deposit (CDs)

Like a HYSA, CDs are a type of savings account. With CDs, you make a lump-sum deposit into an account and lock in an interest rate for a set term, ranging from as little as three months or as long as five or 10 years.

While HYSA APYs can fluctuate, CD rates allow you to lock in a rate for set terms. For instance, if you open a 6-month CD with a 4.50% APY at one bank, but that rate drops next month for those terms, it won’t impact your account since you opened it today when that rate had set interest rates.

Each financial institution has different requirements to get the best CD rate. Some have high deposit requirements to get the best yield rate. Others offer a competitive yield with a much lower minimum deposit amount.

Your earnings depend on your deposit amount, interest rate and terms. You could face an early withdrawal penalty if you withdraw your money before your term is up.

But CDs — like HYSAs — won’t lose money like traditional investments do. However, you won’t earn as much as you would through the stock market.

3. Treasury securities

Treasury securities — including Treasury bills (T-bills), Treasury notes (T-notes) and Treasury Inflation-Protected Securities (TIPS) — are issued and backed by the U.S. government. Considered among the safest investments, they carry little risk of loss because they’re government-guaranteed.

These securities typically don’t perform as well when inflation is low, and their returns are closely tied to inflation and overall market conditions.

Unlike stocks or corporate bonds, Treasury securities come with far less risk. However, that safety comes at the cost of lower returns compared to more volatile market-based investments.

4. Annuities

Annuities are sold by insurance companies rather than banks or broker-dealers. You can purchase an annuity with a lump sum or through a series of payments, and you have the option to begin receiving payouts immediately or at a later date.

These products are often best suited for individuals nearing retirement who want to secure a stream of guaranteed income alongside Social Security and other retirement benefits, especially if there’s concern about covering monthly expenses in the years ahead.

While annuities aren’t as liquid as high-yield savings accounts or certificates of deposit, they’re generally considered safe and low-risk. One of the biggest drawbacks, however, is the potential for high fees. Annuities can also be complex, with a wide range of customizable options designed to meet specific financial needs.

Before buying an annuity, it’s important to speak with a licensed financial advisor who understands these products and can walk you through your options. Unfortunately, annuity scams are common, particularly among older adults, so it’s essential to know how to spot red flags.

Never sign anything on the spot or hand over money upfront. Always review the contract carefully — if you’re unsure, consider having a trusted attorney or knowledgeable friend look it over. Be wary of anyone who pressures you into a quick decision.

Ask to see licenses or professional credentials, and verify that the company is legitimate through your state’s department of insurance.

5. Dividend stocks

If you’re going to keep your money in the stock market, you might as well earn something along the way. Dividend-paying stocks distribute a portion of a company’s profits to shareholders, typically on a monthly, quarterly or annual basis, depending on how the company structures its payouts.

Each company sets its own dividend schedule and payout amount, so returns can vary widely. Your earnings from dividends depend on how many shares you own, but it’s important to note that dividends aren’t guaranteed.

Companies can raise, lower or suspend payments at any time.

Be cautious when evaluating dividend yields. A high yield can sometimes signal risk rather than reward, so it’s wise to research not just the yield but the company’s overall financial health and dividend history before investing.

Related Content

• 6 Best Dividend Growth ETFs to Buy
• Where to Store Your Cash This Year
• Money Market Account vs High-Yield Saving

The Federal Reserve cut rates for the first time this year. Based on weak job numbers, the Fed decided to cut the federal funds rate by 25 basis points in an effort to stimulate job growth through lower borrowing costs for companies.

When this happens, it can impact the earnings you'll receive from savings accounts as cuts lower APYs. However, because the Fed hadn't cut rates until now, rates remain high.

And while that will change soon, it doesn't mean you still can't earn a healthy return to outpace inflation. If you have any short-term or year-end goals you want to reach, here are smart places to park your cash.

Start with a fresh budgeting perspective

Let's start with the basics: In order to have cash to save, you need to not spend all your money. Budgeting apps can be useful tools to help make sense of how you’re spending money and if you’re reaching your savings goals.

Here are a few of Kiplinger's favorites:

• Quicken’s Simplifi: Creates a personalized spending plan to monitor where your money goes. If behaviors change, such as holiday spending or travel increases costs, it allows you to tweak your budget to ensure you're meeting savings goals. Quicken also released LifeHub, a digital document storage platform that allows you to secure your most important documents digitally.
• Empower: A helpful app that tracks spending alongside investments. It also allows you to see college savings accounts, mortgages and health savings accounts, giving a fuller view of your finances in one place.

For more options, see our roundup of the best budgeting apps.

Build wealth with a high-yield savings account

A high-yield savings account is an effortless way to save money. I use one and receive a significantly higher interest rate relative to what brick-and-mortar banks offer.

There are plenty of savings accounts where you can earn over 4%. While the recent Fed cut will dip APYs somewhat, you'll still earn a rate outpacing inflation.

Use our tools from Bankrate to find the best fit for you:

For more options, see Kiplinger's roundup of the best high-yield savings accounts.

Along with higher rates, high-yield savings accounts come with other benefits. You’ll receive financial protection by way of the FDIC for banks and the NCUA for credit unions, offering up to $250,000 to cover assets in case the financial institution fails. And you have easy access to your money whenever you need it.

On the other hand, high-yield savings accounts could require a minimum balance, and falling short on the minimum may result in higher monthly fees, negating any interest earned on the account. Rates on these savings accounts are also variable, meaning if the Fed decides to cut rates again this year, you won't earn as much on them.

Set savings goals with CDs

To get around the variable rate concern of high-yield savings accounts, look at another savings option: A certificate of deposit.

This form of investment allows you to deposit a fixed amount of money for a term. Terms can range from three months to five-year CDs. Similar to high-yield savings accounts, CD rates can take a dip if the Fed decides to cut rates.

However, as you can see with this Bankrate tool, we can still receive a good rate of return:

What makes CDs an enticing choice is that when you sign up, the rate you earn doesn’t change throughout the term, unlike high-yield savings accounts, which can fluctuate based on market conditions. CDs also come with FDIC or NCUA protection and are great places to park money and forget about it.

For more options, see Kiplinger's best CD rates.

That said, CDs won’t always be the wisest fit for financial flexibility. CDs lock in cash for a certain amount of time, so if you need to withdraw the money, you would need to close the CD, and penalty rates for doing so usually offset the interest earned.

You also won’t be able to add money to the CD over time, unlike with a savings account. And even with the higher rates, you can potentially stay more ahead of inflation with other strategies, like investing in the stock market.

Reach retirement goals with a reputable broker

A record-breaking 162 million Americans invested money last year, according to a Gallup survey. As such, at least 18 brokerages are competing to earn your business. The best online brokers and trading platforms allow you to trade stocks, mutual funds and exchange-traded funds commission-free.

Since the services vary wildly by provider, Kiplinger chose some of the best platforms for you to consider. We surveyed nine providers and four smaller brokerage houses, and included the best overall option and the one with the best investment opportunities.

Here are two of our top choices:

• Fidelity: Kiplinger ranked Fidelity the best overall online broker, thanks to its tool, Fidelity Go. With it, investors with less than $25,000 receive free advice. For investors with larger portfolios, Fidelity Go offers access to human advisors with an annual fee of 0.35% of the total assets. Fidelity also earned high marks for investment choices, tools, fees and an easy-to-use mobile app.
• Interactive Brokers: Kiplinger ranked them as the top investment broker with the best investment options. Interactive is a leader in municipal and corporate bonds and fractional share trading. Along with Fidelity, they lead the pack in allowing us to set up automatic stock purchases.

Bottom line on where to store your cash in 2025

Even with the rate cut and inflation being high, high-yield savings options are still a smart move. Both high-yield savings accounts and CDs earn healthy rates that'll keep your finances ahead of inflation and you on the road to achieving your savings goals for 2025 and beyond.

Related content

• 3 CDs I Wouldn't Use Right Now
• How Trump's Tariffs Could Impact Your Grocery Bill
• Best Online Brokers and Trading Platforms
• Best High-Yield Savings Accounts
• The Best Budgeting Apps

The Federal Reserve meet on December 17-18 to determine if they need to cut rates for a third time this year. They previously met in November, where they cut rates by 25 basis points, or 0.25%. In a poll conducted by Reuters, 90% of economist believe the Fed will cut rates by another 25 basis points when they meet next week.

With rates dropping, now is a good time to reassess your approach to CDs and high-yield savings accounts to make sure you get the most out of your money. Here’s what you should do about CDs and high-yield savings accounts before the Fed might cut rates again.

What should savers do about CDs and high-yield accounts before a Fed rate cut?

HYSAs

If you don’t already have a high-yield savings account, it’s still worth getting one, even after the recent drop in savings rates. Keeping your cash in a high-yield savings account is an easy way to maximize your savings through compound interest, and rates are still much, much higher than rates you’d find on standard savings or checking accounts.

As of December 2, the national average savings account yield was 0.60%, according to Bankrate. Rates for the best high-yield savings accounts still top 4%, even after a drop in rates.

Keep in mind that high-yield savings accounts have variable interest rates, meaning the APY on your account will fluctuate based on the market. Because of this, you won’t be able to lock in rates. However, savings rates might fall gradually over the coming months, instead of falling off immediately — so take advantage of high APYs while you still can.

If you already have a high-yield savings account, now's a good time to check your rates and potentially shop around for an account that will let you earn even more.

Compare rates by using our tool below, powered by Bankrate.

CDs

If you opened a CD account during the boon to savings rates, it may be nearing maturity soon. While many individuals opted for short-term CDs, thanks to their impressive rates, it may now be more prudent to open a long-term CD. Keep in mind that typically, banks renew a CD at a similar term automatically once it matures, so be sure to contact your financial institution before this happens.

Opening a five-year CD can be an easy way to maximize the amount of interest earned on your savings, because of course, the longer you keep your money in a CD, the more interest you’ll earn. Just be sure you’re okay with the time commitment — you won’t be able to withdraw funds or you’ll be charged a fee, offsetting any interest you may have earned.

You can use our tool below, powered by Bankrate, to compare CD rates today.

Bottom line

Starting in March 2022, the Federal Reserve raised interest rates 11 times to combat high inflation. However, as inflation started to cool, the central bank began holding the federal funds rate steady at its 23-year high — a target range of 5.25% to 5.50%

After eight consecutive meetings of holding rates steady, the Fed finally cut rates twice, and might be poised to do so again next week. While this should provide some relief for borrowers as interest rates go down, savings rates will also decline. Rates are expected to continue declining throughout 2026.

You won't be able to lock in rates with a high-yield savings account, so the earlier you start taking advantage of high yields, the better. And while you can lock in rates with a CD, make sure you won't need to access your cash before it matures. If you're okay with tying up a good amount of money for several years, it'll pay off in the long run.

Related Content

• With Mortgage Rates Dipping, Is Now a Good Time to Buy a House?
• Best High Yield Savings Accounts
• Savings Calculator: If You Saved $5,000 Five Years Ago, Here's What You'd Have Now

The Federal Reserve held rates steady at its April meeting, giving savers a bit more time to take advantage of elevated yields. While rate cuts are still expected later this year, this pause extends the window to lock in stronger returns on high-yield savings accounts before APYs begin to drift lower.

When the Fed cuts rates, it lowers the APYs on savings accounts. However, it can take weeks to months for banks to lower rates, and even with a minor reduction, high-yield savings accounts will still earn a rate surpassing inflation.

We also present another risk-free savings option that'll help you maximize returns.

Why it’s worth getting a high-yield savings account before the next Fed meeting

Opening a high-yield savings account is a smart way to reach your savings goals.

Why? Because the rates are still high. Our top choice, Newtek Bank, offers a 4.20% APY with no account minimums. Best of all, the account doesn't come laden with fees to impede savings growth.

Along with Newtek, you can compare rates on high-yield accounts by using the tool below, powered by Bankrate:

Before opening a high-yield account, keep in mind the following:

• High-yield savings accounts have variable interest rates, so if the Fed decides to cut rates again in the future, it can lower your APY
• Find a bank offering FDIC or NCUA insurance (for credit union members), as it'll protect your deposits up to $250,000 per person
• Keep your money in a separate savings account so it's more difficult to access, reducing impulse purchases and allowing your savings to grow
• Set up automatic payments from your checking account to your high-yield account, so it makes saving money easier
• Having cash access to a high-yield savings account can be a challenge, so make sure to have an emergency fund with an account you can regularly withdraw cash from if needed

When to consider a CD account

Unlike high-yield savings accounts, CD accounts offer a fixed APY. This means that if rates go down after you've opened a CD, your earnings won't be affected.

If you're concerned about earning a lower rate of return, then it's wise to consider this over a high-yield savings account. You can shop and find the best CD term for your needs, using this tool powered by Bankrate:

While opening a CD account can be a smart way to take advantage of high rates for as long as possible, there's one caveat: You'll need to make sure you don't make any withdrawals before the CD matures. Doing so will result in fees that can offset any interest earned (unless you have a no-penalty CD account).

Another thing to keep in mind is that many banks automatically renew CDs. Set a reminder on your phone a week before maturity, so you have time to explore more options.

Lock in higher returns while you can

Taking advantage of today’s high-yield savings and CD account rates can help you maximize your earnings. With rates holding steady for now, savers still have a window to earn above-average returns before potential cuts begin to push yields lower, making this a smart time to put idle cash to work.

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Savings rates won’t be this high forever. In fact, now may be your last chance to score some of the best savings rates. Rates on many top-earning accounts have noticeably been dropping over the last two weeks, so opening an account now, rather than later, could pay off. However, despite the decline in rates, several accounts still offer impressive yields, in some cases 6% or more. 

6% interest or higher

Here are some of the highest-yielding accounts available, offering at least 6% APY.

Orion Federal Credit Union

APY: 6.00%

Based in Memphis, Tennessee, the Orion Federal Credit Union Premium Checking account offers 6% APY on balances up to $10,000. And higher balances still earn a solid rate of 5%. To qualify for the best rate, you’ll need to make electronic deposits totaling at least $500 per month, as well as spend at least $500 a month on your Orion debit or credit card. If requirements are not met, you’ll be charged a $5 monthly fee. The account has no minimum balance requirements.

Nuvision Credit Union

APY: 6.00%

You can score a 10-month CD with an APY of 6% with Nuvision Credit Union, but you’ll want to act fast. This rate is only available until July 31, 2024. The account has a minimum opening requirement of $1,000, and balances cannot exceed $5,000. There are no monthly fees. After your CD matures, it will convert to a 12-month CD. 

Digital Federal Credit Union

APY: 6.17%

The Primary Savings account from Digital Federal Credit Union offers an APY of 6.17% on balances up to $1,000. Balances above $1,000 will only earn 0.15% APY. There is a $5.00 minimum to open the account, but a minimum balance requirement to earn APY. Plus, there are no monthly fees.

Landmark Credit Union 

APY: 7.50%

With Landmark Credit Union’s Premium Checking account, you can earn up to 7.50% APY, but only on balances up to $500. You’ll need to enroll in eDocuments and have a direct deposit of at least $250 a month to qualify. The Minimum deposit required to open the account is $35 and there are no monthly maintenance fees. While this account offers an extremely impressive rate, it might not be the best place to store your cash, as you’ll only earn 7.50% on the first $500 you put in the account.

5.50% APY or higher 

Though there are few accounts offering rates of over 6%, plenty of high-yield savings accounts and CD accounts offer rates well over 5% — a solid return on your cash. You can browse some of the highest rates available today by checking out our article on the best high-yield savings accounts as well as the best CD rates.

Here are several top accounts offering APYs of 5.50% or more.

Flagstar Bank: High-yield savings account
APY: 5.55%
Minimum opening deposit: $25,000

Poppy Bank: High-yield savings account
APY: 5.50%
Minimum opening deposit: $1,000

Bask Bank: 3 month CD
APY: 5.53%
Minimum deposit: $1,000

Total Direct Bank: 6-month CD
APY: 5.51%
Minimum deposit: $25,000

Paramount Bank: 11-month CD
APY: 5.55%
Minimum deposit: $1,000

You can also use our tools below — powered by Bankrate — to browse rates on both high-yield savings accounts and CD accounts.

What will happen to savings rates in 2024?

When the Federal Reserve began its rate hiking campaign back in March 2022 in order to combat high inflation, savings rates began to rise along with interest rates. Overall, the central bank raised the fed funds rate, a key overnight bank lending rate, 11 times between March 2022 and July 2023, but as inflation began to cool, rates were held steady. And when the pause on rate hikes began, savings rates began to slightly inch down. Rates on savings accounts will soon drop even further as the Fed expects one quarter-point cut later this year.

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Those nice, safe returns on cash sure have been sweet, but don’t count on them lasting. After years of near-zero yields, interest rates began a rewarding upward climb in 2022. In early 2024, prime money market funds yielded an average of 5.1%. You could find one-year certificates of deposit at 5.5% and high-yield savings accounts cresting 5%. Those yields handily beat inflation, which rose 3.4% overall in 2023. Little wonder that investors have added more than half a trillion dollars to money market funds in the past 12 months.

But the Federal Reserve’s expected interest rate cuts in 2024 will sap yields on all kinds of savings accounts and safe, short-term investments. Investors are betting that the Fed will cut interest rates faster and deeper than it has publicly telegraphed, perhaps pushing money fund yields below 4% later this year. Most economists expect inflation will fall also, potentially keeping inflation-adjusted returns on cash in the black. Still, the prospect of more-anemic interest rates is sparking many investment professionals to suggest that investors rethink their plump cash positions.

“It was definitely the right move to go to cash in 2022” after the Fed started raising interest rates, says Benoit Anne, a managing director at MFS Investment Management. “But everything comes to an end,” he says. “You are going to leave a lot of chips on the table if you stick with a high cash allocation in 2024.” 

Investors seeking safety by loading up on cash may neglect to protect their portfolios from three other important risks: inflation that reduces their purchasing power; the risk of having to lock in lower rates when it comes time to reinvest; and opportunity cost, or the risk of self-destructive regret if you miss out on a bull market in some other asset class. 

It’s understandable that many investors are reluctant to “leave the nice, warm bed of high money market rates,” says Lauren Zangardi Haynes, a certified financial planner based in Richmond, Va. But she’s urging her clients to adjust their portfolios for lower interest rates. That doesn’t mean taking the financial equivalent of a polar bear plunge into stocks and bonds, she says. “You don’t have to go all in all at once. Put your toes in. Put a little bit of money in every month and stick to that plan,” she advises. Consider some options, below. (Prices, yields and other data are as of January 31, unless otherwise noted.)

Find your way into fixed income

Though the highs might already be behind us, it still pays to lock in some of today’s still-enticing yields. Rob Williams, managing director of financial planning at Charles Schwab, suggests building a ladder of CDs or Treasury securities by spreading out the money among investments that come due in two, three, four and five years. At the end of January, a five-year Treasury note yielded 3.9%.

An easy way to wade into the broader fixed-income market is with a diversified core bond fund. Fidelity Total Bond (symbol FBND), a member of the Kiplinger ETF 20, the list of our favorite exchange-traded funds, has a duration of just over six years, meaning the value of the fund will rise roughly 6% if rates fall one percentage point. (Prices and interest rates move in opposite directions). The actively managed fund, yielding 5.1%, divides its portfolio roughly into thirds among government IOUs, corporate bonds and mortgages. Its expense ratio is 0.36%.

You can also trust the superb bond-picking skills of the managers of Baird Aggregate Bond (BAGSX), another intermediate-term core fund and a member of the Kiplinger 25, the list of our favorite actively managed funds. It charges 0.55% in expenses and yields 4%.

Once you get your feet wet, explore the bargains on offer in the bond market now, suggests Pramod Atluri, a fixed-income portfolio manager for the Capital Group, home of the American Funds. But be choosy. “You should only take risks when you’re getting paid to take risks,” he says. Atluri sees promise now in government and agency-backed mortgage bonds. 

Mortgage funds generally languished in 2023 as rates rose and investors focused on other types of bonds. But as rates reverse course, there’s plenty of room for price gains on top of a healthy yield, Atluri says. And risks are low, even if homeowners default, because of guarantees from Uncle Sam or government-sponsored enterprises. American Funds Mortgage Fund (MFAEX), available without a sales charge on fund platforms including Fidelity and Schwab, charges 0.63% in expenses and recently yielded 4.2%. 

Or consider Vanguard GNMA (VFIIX), which invests in bonds backed by the Government National Mortgage Association (Ginnie Mae). It has a solid record, charges an expense ratio of 0.2% and yields 3.2%.

Step carefully into stocks

In early 2024, many investors may be leery of a stock market trading at record highs and dominated by a handful of enormous technology stocks with sky-high valuations. Stocks in the S&P 500 index recently traded at a price-earnings ratio of 20, compared with a 10-year average P/E of 17.6, according to FactSet Research.

Savita Subramanian, head of U.S. equity strategy at BofA Global Research, suggests investors opt for stocks trading at more-reasonable price-earnings levels. So-called cyclical stocks, or those most sensitive to economic swings, are “neglected and inexpensive,” Subramanian says, and she counts banks and financials among the sectors positioned to do well. 

Subramanian is especially bullish on dividend-paying stocks. While the Magnificent Seven have soared, “everything else has flatlined,” she says. “Dividend stocks are trading at a 30% discount to the rest of the market, the biggest discount since 2000.” One option among the Kip 25 funds is Vanguard Equity Income Fund (VEIPX), which has a portfolio of nearly 200 companies with P/Es averaging about 13 and an average dividend yield of 3.4%. 

Zach Jonson, chief investment officer of Stack Financial Management, suggests investors also focus on companies in sectors that have missed out on much of the recent bull market run-up. Health care and consumer staples companies have comparatively low average P/Es, he says. Consider investing a small amount in those sectors with ETFs such as Health Care Select Sector SPDR (XLV) and Consumer Staples Select Sector SPDR (XLP).

Because he expects economic trouble and market volatility in 2024, Jonson is keeping about half of Stack’s portfolio in cash or short-term bonds. But he’s bullish on Cigna Group (CI), a health insurer trading at 11 times expected earnings for the year ahead. Cigna’s 2024 revenues are on pace to rise nearly 19% compared with expected 2023 levels, according to analyst estimates compiled by S&P Global Market Intelligence, and earnings per share should be up 14%. Analysts see the shares reaching $354 over the next 12 to 18 months. 

Jonson also sees value in some industrials, including Genuine Parts (GPC). “Its auto parts business is recession-resistant. People who can’t afford a new car are going to fix the old one. And it’s benefiting from industrial automation, the wave of the future,” Jonson says. The company has also increased its annual dividend for 67 straight years. Morningstar analyst David Swartz says the stock would be fairly valued at $161 per share. 

If you want some principal protection but you also have a fear of missing out on potential bull market gains, consider one of the many new “defined outcome” ETFs. These funds, offered by First Trust, Innovator Capital Management and a handful of other issuers, use options to create a buffer against stock market losses, to varying degrees, over certain periods. The catch is that the strategy caps potential gains. “They are not a magic bullet,” cautions Schwab’s Williams, and they come with a lot of fine print.

Fighting FOMO

Pay attention to how you put your cash to work as well as to what you buy. David Blanchett, head of retirement research for PGIM, the investment management division of Prudential Financial, suggests parceling out any shifts in your cash allocation over time. Dollar-cost averaging, or investing a set amount at regular intervals, can take the emotion out of investing. It will also result in paying a lower average price per share in volatile markets, because you’ll buy fewer shares when prices are high and more when they are low.

Lastly, as you contemplate deflating your cash cushion a bit, think about the reason you’re holding cash in the first place. If it’s to be able to sleep at night, consider that it is almost impossible to time the market perfectly, says Blanchett. Regrets about missing out on an unexpected bull market can also keep you awake. 

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

With today’s interest rates, money left in savings accounts is earning more than it has in years past.

Some banks are offering more than 5% annual percentage yield on savings accounts. A couple of years ago, those same high-yield savings accounts were offering just more than 1% APY. Therefore, seeing your interest credit on your account increase so drastically can be enticing.

For example, if you have $25,000 in a high-yield savings account at 1% APY, you would earn about $250 in interest over the course of a year. Now, if the APY were 5%, you would earn about $1,250 in interest a year. That’s a big difference. So, it can feel like your high-yield savings account is really working for you these days.

A high-yield savings account can be a good way to build an emergency fund or save for something in the near future. But for long-term goals like retirement, you may want to consider investing your money and positioning it for protected growth.

Some consumers worry about a recession

Yet, many people are worried about the economy and nervous about investing. In fact, nearly half of all Americans (48%) said they are keeping more money than they should in cash because they’re worried about a recession, according to the 2024 Q1 Quarterly Market Perceptions Study* from Allianz Life Insurance Company of North America.

More than half of Americans (57%) said they are keeping more money in a high-yield savings account (HYSA) or money market funds because of interest rates. Millennials, in particular, said they are holding more money in these accounts. While 62% of Millennials said they are keeping more money in high-yield savings accounts or money market funds because of rising interest rates, 50% of Gen Xers and 54% of Boomers said the same.

The allure of high interest rates can make it feel like holding cash in an HYSA is a wise financial move.

Yes, you need to have cash for emergencies and unexpected expenses like car repairs, medical bills and other needs. You don’t want to take on debt in order to cover those bills. So, your emergency fund should be kept in cash or another liquid asset.

Beyond that, you need to keep your money for long-term savings working for you — invested in the market. While some investments can be volatile in the short term, investments typically increase in value in the end.

One big reason to stay invested in the market is to mitigate the effects of inflation on your assets. This is important, as we recently experienced a period of high inflation, and 68% of Americans still say prices are too high and they are struggling to stay afloat. A savings account will likely have a lower interest rate than inflation, meaning your purchasing power is decreasing over time.

Limit your risk exposure

You can take part in the market and invest without throwing all caution to the wind. Investing in the market typically provides greater returns than a savings account over the long term. There are investment options that are less volatile than the market as a whole.

Index funds and stocks that historically pay dividends are often strong places to invest over the long term. You could also buy exchange-traded funds (ETFs) that represent a basket of securities and are traded like stocks on stock exchanges, most with relatively low fees. You can select from different kinds of ETFs, depending on the benefits you’re looking for. If your top concern is limiting exposure to market risk, an ETF with a buffer or floor may be a good option to manage downside exposure.

At the same time, varying your holdings can help to diversify your taxable income. The interest earned in a high-yield savings account is taxed like ordinary income. In comparison, gains from selling stocks that you held for at least a year may qualify for the lower capital gains tax rate.

Instead of parking money in cash, keep investing toward long-term goals. This could include contributions to your employer-sponsored retirement plan, like a 401(k) or a Roth individual retirement account. An annuity designed for accumulating for retirement can offer tax-deferred growth, protects principal and has the potential to deliver indexed interest.

Consider an HSA or 529 plan

You may also want to consider adding funds to a health savings account (HSA) or to children’s education funds, like a 529 plan. These accounts are tax-advantaged and can help pay for medical and education expenses later on. This is all about the potential to build wealth for the long term.

While interest rates are high now, they may go back down. Moreover, we don’t know when or by how much. So, for long-term growth, that HYSA may not cut it. Keeping money in cash could cause you to lose out in the end. A financial professional can help determine what’s suitable for your situation. For your future financial security, it may be appropriate for you to continue to invest in the market — with the risks in mind.

* Allianz Life conducted an online survey, the 2024 Q1 Quarterly Market Perceptions Study, in February 2024 with a nationally representative sample of 1,005 respondents age 18+.

Allianz Life Insurance Company of North America (Allianz Life) has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products.

Diversification does not ensure a profit or protect against a loss.  

Related Content

• Three Steps Help Ensure Your Money Lasts in Retirement
• Four Things Gen Xers Can Do Now to Reach Retirement Goals
• How Lower Interest Rates Could Affect Older Adults
• How to Cut Your Taxes as Short-Term Interest Rates Come Down
• How to Ride the Waves of Interest Rates and Inflation

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Looking to maximize your savings in 2024? Opting for the right savings account can help boost your savings with no extra effort required. So, if one of your New Year’s resolutions is to save more this year, you could benefit from putting your cash into a high-yield savings account with a competitive APY. 

One account in particular that can help grow your savings risk-free is Milli Bank’s mobile savings account, available on both iPhone (iOS 15.0 or later) and Android devices (Android OS 8.0 or later). Milli's high-yield savings account offers a 5.50% APY and has no additional fees or minimum balance requirements. This is one of the highest APYs on the market. 

In the app, Milli allows users to organize savings into personalized "savings jars" that each earn interest. These can be a useful tool if you're looking to start budgeting and set aside money gradually for different goals or expenses. Milli accounts, including savings jars, are FDIC insured up to $250,000. Milli is a division of First National Bank of Omaha (FNBO).

On the down side, Milli has been hit with some customer service complaints noting that the app can be slow to clear money transferred from your bank and Milli can be slow to respond to customer complaints. While a market-leading rate might be the most important factor for you, other considerations are customer service, the ease of signing up and clear communication on the process. Please note all of the accounts and products we cover are FDIC-insured.

Here are several pros and cons of the account and platform: 

Why open a CD?

Because the cash saved in them is easily accessible, high yield savings accounts are good alternatives to CDs if you don't want your money tied up for long periods of time. Unlike CDs, there's no maturity date on a high yield savings account — you can withdraw funds at any time. For this reason, they make great savings vehicles for short term savings goals or emergency funds. Just keep in mind that rates on high-yield savings accounts are not fixed, meaning the rate you earn can fluctuate with the market. 

When you compare CDs vs. high-yield savings accounts, you'll also see that high-yield savings accounts are more suited for individuals looking to gradually save by making regular deposits into an account. CDs, on the other hand, require a singular up-front payment upon opening the account. 

Savings in 2024

Since March 2022, the Federal Reserve raised the federal funds rate 11 times in an effort to combat inflation by driving spending down as consumers realize higher commercial interest rates on mortgages, credit card APRs and other loans. The upside to this was that when the federal funds rate increased, interest rates on high-yield savings accounts and CDs did too. However, at the latest policy-setting meeting, the Federal Reserve held interest rates steady yet again. This third consecutive pause in rate hikes means the Federal funds rate, a key bank lending rate, will remain at a target range of 5.25% to 5.5%. Furthermore, the Federal Reserve also sees three interest rate cuts in 2024, and has lowered its median interest rate projection for the end of 2024 to 4.6%.

Savings rates, particularly CD rates, have been falling since the Federal Reserve began holding interest rates steady, and they will continue to drop further if the Federal Reserve cuts interest rates this year, as expected. For this reason, it’s a smart idea to take advantage of rates now, while they’re still high.

You can use our tool below — powered by Bankrate — to compare high-yield savings accounts today. 

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In the face of high interest rates, consumers are parking their cash in the bank to capitalize on higher yields instead of spending money. Credit unions and small banks offer the best value for disciplined savers. 

A recent WalletHub survey of 300 respondents uncovered changing savings and banking behaviors in response to the current high-interest rate environment. Although rising interest rates make borrowing more expensive, it also means consumers are likely to benefit from higher interest rates as they accumulate savings balances.

As of October 2023, the top-earning high-yield savings accounts are paying as much as 5.33%, a multi-year high. 

Savvy savers have taken the rise in rates as a signal to slow spending with 3 in 5 Americans spending less due to higher rates. Considering that a separate WalletHub survey tracked a 270% increase in savings account rates and a 191% increase in checking account rates over the past year, consumers have ample incentive to park their money in the bank.

The majority of people surveyed (56%) are keeping a tight hold on their cash by stashing more away in their bank accounts compared to last year to take advantage of higher yields.

You can use our tool, in partnership with Bankrate, to compare the best high-yield savings rates available now.

Small banks and credit unions offer better value 

Earlier this year, a series of bank failures rocked the banking world across five months and shook consumer confidence. This major event may have influenced the general sentiment around smaller financial institutions. In WalletHub’s 2023 Banking Survey, 46% of respondents were hesitant about putting their money in small banks and credit unions. The other 54% weren’t hesitant at all. 

If you’re skeptical about using small banks and credit unions, it could be costing you money. The 2023 Banking Landscape Report found that credit union checking accounts are 82% cheaper than national banks with interest rates 27 times higher on average. 

If your primary concern is getting the highest yield on your money, you certainly wouldn’t want account fees cutting into your returns. That’s where credit unions and small banks excel. Credit unions had the lowest average account fee index at $14 compared to national, regional, community, and small banks. Small banks were the second lowest at $37 in average fees while national banks topped the charts at an average of $79. 

Growing debt cuts into consumer spending as well

Although Americans are spending less and saving more, 1 in 2 still have more debt than savings. Considering total household debt reached $17.06 trillion in the second quarter, the added debt burden is likely another factor alongside inflation and other economic concerns contributing to the drop in spending.

As consumers lean towards saving as a priority, they’re less interested in credit card interest rates. According to the Banking Survey, 56% of respondents were more interested in the interest rates on bank accounts compared to 44% being interested in the rates on credit cards.

Related Content

• Best No-Fee High-Yield Savings Rates October 2023
• What Is a High-Yield Savings Account?
• Top Money Market Accounts

In today's increasingly complex financial landscape, working on your financial goals and wellbeing requires more than just willpower to spend less and save more. It should include a strategic approach to utilizing the resources that your financial institution offers that can provide the vital support and knowledge needed to effectively navigate your financial journey.

These resources often encompass a wide array of financial education programs, personalized services and products that are intentionally geared to bolster your ability to reach your goals, smoothing the path toward financial stability and growth.

A resource that is often underestimated is financial education. The modern financial environment is full of intricate concepts that, once understood, can significantly alter your financial perspectives and view of your financial wellbeing. Most financial institutions strive to boost financial literacy by offering resources like classes, interactive tools, webinars, and on-demand digital content. These features aim to deconstruct complex financial topics into digestible, comprehensible pieces, spanning various topics from managing credit and savings to understanding investments and retirement planning.

Despite the apparent value of these resources, they tend to be underutilized. This unfortunate trend can be attributed to various factors, including a lack of awareness, cost misconceptions, competing priorities or even a hesitance to seek assistance. However, by embracing these educational tools, you can enhance your financial confidence, navigate issues such as credit management, understand investment strategies and handle debt effectively.

Credit and debt counseling can help

Another invaluable resource available through many financial institutions is credit and debt counseling. These services play an instrumental role in guiding you toward a healthier relationship with your finances and planning for the future. Counselors can aid in managing credit effectively, improving credit scores and developing efficient debt-repayment strategies. They can also help you work toward financing a large purchase or using and managing debt effectively.

Financial institutions also offer a variety of incentives and programs designed to encourage saving and investing while supporting you in achieving financial milestones. Resources such as high-yield savings accounts, rewards programs, matching contributions, and reduced loan rates can help you grow your savings, earn higher returns, and minimize the costs associated with financial products.

Even as the digital age has seen many banking services transition online, the importance of face-to-face consultations cannot be overstated. Personal interactions offer opportunities for tailored advice and guidance, addressing your unique financial circumstances and needs. This level of personalization is particularly beneficial when making significant financial decisions, such as buying a home or a car. All told, the optimal approach for many people may involve a combination of in-person meetings and digital interactions, depending on the complexity of your financial needs, preferences, and circumstances.

Resources for retirees and pre-retirees

For retirees and pre-retirees, making the most of your financial institution's resources includes strategic decisions about liquid savings. One of the primary financial objectives in this life stage is ensuring that these funds remain safe and accessible while generating the highest possible interest. Strategies to achieve this delicate balance include confirming that your funds are insured by a reputable authority, such as the FDIC, consulting with a financial adviser, considering the impact of inflation and exploring various types of accounts and financial instruments.

Your financial institution is uniquely equipped to guide you through these considerations and decisions, providing the resources and expertise to help you make informed choices.

Remember — financial institutions are partners in your financial journey. They offer a comprehensive array of resources, tools and services designed to support you in achieving your financial objectives. By leveraging these resources and incorporating them into your fiscal strategies, you equip yourself with the knowledge, tools, and confidence necessary to navigate your financial journey, make informed decisions and work effectively on your financial goals and wellbeing.

related content

• Four Reasons Credit Unions Are a Good Bet in Unsettled Times
• Best Credit Unions
• How Can I Prepare for an Unexpected Financial Emergency?
• Is Now a Good Time to Buy a House?
• CD vs. High Yield Savings Account: Which is Better?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

High-yield savings accounts help you reach your savings goal more quickly. How? By offering higher rates with no account fees or minimums.

Best of all, they can help you keep pace with inflation. The latest CPI report shows that inflation rose to 4.20% in May. This means that unless you're storing your money in a savings account earning at least that much, your earnings are eroded by the rising costs of everyday goods.

With this in mind, here are the best high-yield savings accounts to consider. I'll also show you how much you can earn and the pros and cons of using one.

The best high-yield savings accounts for June 2026

Here are some of the best options I found:

How much can high-yield savings accounts earn you?

Unlike traditional savings accounts, which offer, on average, lower returns, high-yield options allow you to grow your money much more quickly.

If you select my top choice, Newtek Bank, here's how much you can earn in one year with varying deposits:

• $10,000: $428.92 in earned interest
• $25,000: $1,072.30 in earned interest
• $50,000: $2,144.60 in earned interest
• $100,000: $4,289.20 in earned interest

Rates on high-yield savings accounts change regularly, so a good way to check for some of the most up-to-date rates is by using the savings tool below, powered by Bankrate:

Pros and cons of high-yield savings accounts

As with all savings products, there are pros and cons associated with high-yield savings accounts. It's important to compare all aspects of an account to make sure it meets your needs before opening it.

Pros:

• Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you'll accrue more interest over time. Plus, interest in these accounts is compounded daily.
• Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank (or credit union) your account is with, you have protection on up to the first $250,000 deposited per account holder.
• Accessibility: While there are limitations on the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed.

Cons:

• Harder to access than traditional savings accounts: If you have a savings account with a different bank than your checking account, you may have to wait a few days for funds to transfer from one to the other. Plus, you won't be able to easily view account details for both accounts in one place unless you have the right budgeting app.
• Not suited for long-term goals: If you're looking to save for long-term goals, like retirement, other investments, like stocks, are usually a better choice for your money. The rate of inflation can be higher than what you earn in interest. Alternatively, you can consider a long-term savings solution like a five-year CD. A CD offers a fixed interest rate, protecting you from any future rate cuts.
• Variable interest rates: Since interest rates are variable, the APY on the account can decrease from the rate it was when you opened the account if the Fed decides to cut rates again in the future.
• Minimum deposit requirements and fees: Many high-yield savings accounts charge a monthly fee and/or require a minimum deposit to earn the advertised APY.
• Online banks: Since most high-yield accounts are offered by online banks, you likely won't have branch access. Therefore, contacting customer service or accessing a fee-free ATM might be more challenging.

Here's why you should act now

With the prices of everyday goods rising, it's essential to maximize your cash. A high-yield savings account gives you a chance to shelter against some of these rising costs, while helping you reach your savings goals and avoiding market volatility.

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As the Federal Reserve hiked interest rates through 2022-2023, rates on high-yield savings accounts and CDs rose in tandem. But since the Federal Reserve began holding interest rates steady (which it did at a fifth consecutive meeting in March), savings rates have started to fall. If the Fed cuts interest rates later this year, as expected, savings rates will likely drop even further. As rates continue to go down, consider locking in rates while they're still high.

To combat inflation, the Federal Reserve hiked interest rates in an attempt to drive spending down, as consumers realized higher commercial interest rates on mortgages, credit card APRs and other loans. There was a silver lining, however — as the federal funds rate increased, interest rates on high-yield savings accounts and CDs did too, as is typical. Offering a high APY (annual percentage yield) on accounts is an effective way for banks to compete for customers and attract deposits.  

But at its latest meeting, the Federal Reserve decided to once again keep the federal funds rate steady. This fifth consecutive pause in rate hikes means the federal funds rate, a key bank lending rate, will remain at a target range of 5.25% to 5.5%, the highest it’s been in 23 years. 

In the official statement, The Federal Reserve stated: "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

However, the Federal Reserve maintains their projection that there will be three interest rate cuts in 2024, reducing the federal funds rate to a range of 4.5% to 4.75%.

Our new comparison tool — in partnership with Bankrate — will help you find the best rates available now. 

How to find the best savings rates 

Compare high yield rates online: Online banks typically offer more generous APYs on savings accounts, so banking online could help you get the best savings rate possible. So, changing from your traditional savings account at a brick-and-mortar bank to an online one might be a good option. 

Avoid teaser rates and tiered interest rates: Teaser rates are promotional rates banks use to attract new customers, but these rates are typically short-lived. Tiered interest rates pay a different yield based on the balance in your account, but if you plan on using your savings at some point, opting for an account with a flat APY is likely a better choice. 

Take into account any fees: While high-yield savings accounts do offer higher than average APY on deposits, some have strings attached. Some high-yield accounts will have fees or balance requirements that could potentially decrease their overall value, so it's important to consider this to find the best options.  

Here are some of the best high yield savings accounts.

Poppy Bank: 5.50% APY; $1,000 minimum opening deposit

My Banking Direct: 5.35% APY; $500 minimum opening deposit

Ivy Bank: 5.30% APY; $2,500 minimum opening deposit

TAB Bank: 5.27% APY; $0 minimum opening deposit

UFB Direct: 5.25% APY; $0 minimum opening deposit

Newtek Bank: 5.25% APY; $0 minimum opening deposit

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Many people scoff at the idea of seeking out the best savings accounts, as we have gotten used to them paying miserly returns. Millions of people across the globe leave their emergency funds or spare money in current accounts paying no interest or in old savings accounts that pay close to nothing. 

However, I want to fly the flag for the growing army of switchers in so many countries who are now seeking out the best rates, as right now it can make a big difference. 

While I cannot tell you whether to save or invest, as that’s a personal choice based on a number of factors, what I will say is that if you are a cautious investor, then I would certainly be considering guaranteed returns of about or over 5%, which you can find on the the best CDs, best high yield savings accounts or best money market accounts. 

Before we go on, check out our tools in partnership with Bankrate below, which lets you compare CD accounts and savings accounts.

Of course, the ability to make good money switching only applies if you have penalty-free access to your cash. 

Can you make thousands switching your savings?

At 5% returns, for every $1,000 you have, you are earning about $50 per year, which is not to be sniffed at when you look at recent averages. If you have $100,000, that’s another $5,000 per year, which could pay for a vacation or an upgrade to your home. 

I have recently moved my savings around to take advantage of higher rates and I would encourage others to do the same as otherwise you are throwing money away. Switching can take as little as a few minutes and if that can earn you hundreds — or even thousands — more per year, I’d say that’s a few minutes well spent. 

While I’ve been playing the savings merry-go-round for the past decade even in a low-interest rate environment, I accept I am an exception given I am a personal finance journalist, so this is my bread and butter, and not everyone would have taken the time to do so for far smaller gains than today. 

In fact, I wouldn’t have written this sort of article a year ago with so much gusto when rates were so much lower, which reduced the incentive to switch and made savings look less attractive versus the best investments. Having done this sort of job for close to 20 years, this is the most exciting time I can remember for the savings market as we are coming out of the doldrums and into the light. 

Yes, I really did put “savings” and “excitement” in the same sentence, because for us personal finance nerds it is an exciting time. 

Could savings rates go even higher?

There is a chance rates could improve even further although the Federal Reserve's rate-hiking campaign to combat inflation seems to be on pause. At its most recent meeting in March, the central bank opted to keep the fed funds rate, a key overnight bank lending rate, unchanged at a target range of 5.25% to 5.5%. 

While there have been 11 interest rate hikes since March 2022, this is the fifth pause in a row, leaving the Fed funds rate at its highest level in 22 years. In its accompanying statement, the Federal Reserve signaled that while its rate-hiking campaign is on pause for now, it stated that "the Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent." The Federal Open Market Committee (FOMC) noted that the Committee was still strongly committed to returning inflation to its 2 percent objective. 

While a Fed rate pause doesn’t guarantee a taper in savings rate increases, banks tend to at least roughly follow the Fed’s trajectory, so you’d expect the rate increases to be smaller or stall.

Of course, you can’t control what the Fed does, nor what is happening in the wider economy, but you can control how hard your money is working for you to some extent, so I say it’s time to become a savvy saver. 

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A high-yield savings account is essentially the same as a traditional savings account with one key difference — high-yield savings accounts pay a higher-than-average APY on deposits. An APY, or annual percentage yield, is the amount of interest earned on an account in one year. The APY for high-yield savings accounts can be anywhere from 3% to over 4.20% — much higher than that of a traditional account.

The national average savings account yield is just 0.61%, according to Bankrate, while some of the best high-yield savings accounts offer rates of over 4%.

Here's what you need to know about opening a high-yield savings account. Also, we'll cover the pros and cons of using one and how much you can earn using one.

When should you use a high-yield savings account?

If you're not using a high-yield savings account, you're leaving money on the table. Because high-yield savings accounts offer higher rates than traditional savings accounts, your cash will accrue more interest by simply sitting in a high-yield account, with no effort on your part. And there's no risk, either.

High-yield savings accounts are great options for emergency funds and short-term savings goals. Unlike CD accounts, which have penalties if money is withdrawn before a certain time frame (typically a year or more), money in your savings account is more liquid.

You can usually access and withdraw funds from your high-yield account up to six times a month without incurring penalties. Therefore, these accounts are good options for saving any cash you need accessible.

The one thing to keep in mind is that inflation is 4.20%. It means unless you have an account earning this money, you're losing money. Right now, this is the one high-yield savings account I recommend getting:

Pros of high-yield accounts

Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you’ll accrue more interest over time. Plus, interest in these accounts is compounded daily.

Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank your account is with, your money will still be safe.

Accessibility: While there are limitations to the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed.

Cons of high-yield accounts

Harder to access than traditional savings accounts: If you have a savings account that's with a different bank than your checking account, you may have to wait a few business days for funds to transfer from one to the other.

Not suited for long-term goals: If you’re looking to save for long-term goals, like retirement, other investments, like stocks, are usually a better choice for your money. The rate of inflation can be higher than what you accrue in interest.

Variable interest rates: Since interest rates are variable, the APY on the account can decrease from the rate it was when you opened the account.

Online banks: Since online banks offer these accounts, you likely won’t have branch access, so contacting customer service can be more challenging.

How much can I earn in a high-yield account?

Many high-yield savings accounts can earn a high APY on balances, but what does this actually look like?

Let’s say you put $10,000 into an account with a 4.20% APY. After a year, your balance would accrue $428.16. Compare this to a savings account earning only 0.61%, where you'll earn $61.17; that's a difference of $366.99 for choosing the right account. With more money and time, that difference will balloon, showing you how important it is to choose the right account.

If you’re looking to save for an upcoming purchase, or just want to maximize your savings as best as possible, it’s a very simple way to do just that.

How to open a high-yield savings account  

So, how do you open a savings account? You’ll open a high-yield savings account in the same way you’d open a traditional one, except you may have to forgo your brick-and-mortar bank for an online bank or credit union, as these are where high-yield accounts are typically offered.

First, you’ll need to opt for an account that works best for you. To do so, you’ll need to take into account not only the APY of the account but also the associated fees. Some accounts have minimum deposit limits or balance requirements, which can charge fees that can potentially take a chunk out of your accrued savings if these requirements are not met.

After considering this and choosing an account, you’ll be required to submit an application, providing personal information such as your Social Security number, home address and driver's license number. Once your account is open and money has been deposited, it functions the same as a typical savings account — and you can add or withdraw funds as you please.

The bottom line on high-yield savings accounts

If you’re looking for an easy way to maximize your savings — try transferring your cash to a high-yield savings account. You’ll have a higher rate of return than that of a traditional savings account, earning you more in the long run, even with inflation rising.

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Using our savings calculator can help you quickly determine how much your money will grow over time. If you invested either $1,000, $5,000 or even $10,000 in a high-earning account several years ago, you could be several thousand dollars richer today.

Whether you’ve just opened one of the best CD accounts or opted for a high-yield savings account with an impressive APY, a savings calculator can easily show you just how much cash you’ll have after a specified period of time, depending on your account APY and any regular monthly contributions you make.

Savings rates have dipped following the Federal Reserve's cutting rates at each of its last three meetings. However, many APYs remain high enough to outpace inflation, making them wise options to consider.

Savings calculator

You can use our savings calculator below to determine how much you'll save depending on several factors — APY, time period, initial deposit and monthly contributions.

To use the calculator, start by inputting the amount of cash you're starting with, or the initial deposit. From there, add in the amount you plan on contributing to the account as a monthly deposit.

After this, you'll then be able to choose from a number of savings accounts with varying APYs. Select a period of time over which your investment will grow, and our calculator will do the work for you, calculating your potential savings.

1. If you saved $1,000 over five years, you'd have...

Keep in mind that savings rates might continue to drop later this year, so you'll want to lock in a great rate sooner rather than later. Here is how much you can earn if you invested $1,000 for five years:

2. If you boost your $1,000 savings pot by $50 each month, you'd have...

If you make regular monthly contributions, you can see the interest stack up, it's the beauty of compounding. Contributing just an extra $50 a month can make a big difference after several years.

If you were to invest $1,000 in one of the top-earning high-yield savings accounts and then save an additional $50 every month for five years (an additional $3,000 in total), here's how much you'd have at the end (not considering rate fluctuations.

3. If you saved $5,000 over five years, you'd have...

Of course, if you increased the amount you saved from $1,000 to $5,000, you'd earn significantly more in interest after five years:

4. If you saved $11,000 over five years...

If you were to save an additional $100 each month ($6,000 in additional contributions) over five years, here's how much you'd have at the end (not taking into account any fluctuations in rates and inflation:

How much should you save each month?

How much you should save each month depends on your specific financial situation, but a general rule of thumb is to set aside three to six months’ salary or living expenses in an emergency fund.

Another general rule that can help you prioritize savings is the 60-30-10 budget rule, in which you devote 60% of your monthly income toward necessities, 30% toward wants, and 10% towards savings or paying down debts.

If you need help with budgeting, budgeting apps are excellent tools to use. They compile all your financial accounts in one place to help you see where your money is going, and to ensure you're on course to reach your savings goals.

How to choose a savings account 

Choosing a savings account depends on your personal financial goals. Here's what to consider.

Certificate of Deposit (CD): A certificate of deposit, or CD, is a type of savings account that holds a fixed amount of money for a fixed period of time. Typical term lengths for CDs range anywhere from three months to five years, so it’s not somewhere you’d store cash you need easy access to. Instead, it’s a good place to save cash you’re holding onto for a particular savings goal. For example, you may plan on purchasing a vehicle or making a down payment on a home in two years and are looking for a no-risk way to grow these savings.

Use this Bankrate tool to find a CD term that works for your finances:

Savings account: On the other hand, savings accounts are better suited for cash you’ll want easy access to, like emergency fund savings. If you want to maximize these savings, consider opening a high-yield account. High-yieldsavings accounts are the same as traditional savings accounts, but they pay a higher-than-average APY on deposits.

Money market account: Money market accounts give you quicker access to your cash while still allowing you to earn a healthy return on your investment. Some of these accounts come with check-writing privileges, giving you the opportunity to have access to cash when you need it.

Balance and deposit requirements: Some accounts have minimum balance and/or deposit requirements. If you fail to meet these, you could incur a fee.

Safety: Ensure your savings account is FDIC or NCUA-insured to keep your savings safe.

Compare some of the best savings accounts below.

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Savings accounts are an easy way to set aside money and develop financial discipline. Once upon a time, passbook savings accounts were the norm. Those days are long gone and your options now may seem endless, if not a little confusing. 

Rates on high-yield savings accounts and CDs rose as the Federal Reserve hiked interest rates through 2022-2023. But since the Federal Reserve began pausing interest rates hikes (which it did at a fifth consecutive meeting in March), savings rates have started to fall. If the Fed cuts interest rates later this year, as expected, savings rates will likely drop even further. As rates continue to go down, consider locking in rates while they're still high.

Here's a look at the different types of savings accounts and how they work. It’s up to you to decide what your savings goals are and which account will get you there the quickest. Use our savings calculator to see how much interest you could earn when you decide to save. 

Types of savings accounts

Traditional savings account

The OG of savings accounts. These accounts can be opened at your brick-and-mortar bank or credit union. Interest rates offered by these accounts are typically low. Unique to traditional accounts — you can visit a branch if you need help or want to deposit cash. 

Important to remember:

• You may be limited to up to six transactions per month before you are charged a fee, not including ATM withdrawals or in-person withdrawals 
• Traditional savings accounts offer a small amount of interest compared to other types of accounts 
• Monthly maintenance fees may cancel out interest earnings

Online savings account

Do you use the internet to manage many of your day-to-day activities? Or maybe you want to reduce the amount of free time you spend running errands? An online savings account may fit into your lifestyle better than a brick-and-mortar bank. There are many types of online savings accounts to choose from. 

Important to remember:

• Online banks have lower overhead costs, which allows them to offer you lower fees and better interest rates 
• You can review your bank statements, pay bills and transfer funds at any time 
• You can't deposit cash unless the bank is linked to ATMs that accept cash 

Specialty savings account

Specialty savings accounts are accounts you might use to save for a vacation or holiday gifts. Although you do earn some interest, the main reason most people open these accounts is to set aside money and have a lump sum available to spend at the end of the year or when the vacation or other event comes up. 

Important to remember:

• You save by depositing a specified amount at regular intervals, usually weekly, and earn interest on your savings
• A club account holds your money until a specified withdrawal date
• You may incur penalties for early withdrawals

High-yield savings account

A high-yield savings account is a savings account with a variable interest rate typically higher than retail brick-and-mortar banks. High-yield savings accounts pay a higher than average annual percentage yield or APY on deposits. The interest on these accounts is compounded daily and posted to accounts monthly. 

Important to remember:

• High-yield savings accounts are great options for emergency funds and short-term savings goals, such as a vacation or big ticket purchase
• You'll be able to accumulate more cash in a shorter period of time because the rate of return on these accounts is better than traditional savings accounts
• You can usually access and withdraw funds from your high-yield account up to six times a month without incurring penalties

Cash management account (CMA)

Cash management accounts are designed for people with large cash holdings they want to keep safe but easily accessible. They are available online from non-bank financial service providers.

When you deposit or withdraw money, your custodian directs funds or removes funds from the different accounts as needed so all your money remains insured.

CMAs protect your money by dividing your deposit into multiple accounts at different banks. For example, if you deposit $1 million into a cash management account, the brokerage might put sums of $200,000 in accounts at five different banks. Distributing the cash among the five banks enables all of your $1 million to be protected by FDIC insurance. 

Important to remember:

• CMAs offer a way to streamline cash management, combining the features of an interest-earning savings account with a traditional checking account 
• Accounts usually offer debit cards, check writing privileges, money transfers, bill payments, and overdraft programs  
• Some cash management accounts reimburse ATM fees, leaving you free to use any convenient ATM

Certificate of deposit (CD)

A certificate of deposit (CD) is a type of savings account that holds a fixed amount of money for a fixed period of time, which can be anywhere from three months to five years. In exchange, CDs pay higher interest rates than standard savings accounts, though you won’t be able to access your cash at will. 

Important to remember:

• CDs offer you a risk-free investment option that earns a fixed, predictable rate of return on your savings 
• You will likely incur a fee if you withdraw your money before the CD’s maturity date
• Typically, the longer the CD term, the higher the APY, but this can vary by institution and interest rate volatility

Find the highest yielding accounts for 1-year CDs, 3-year CDs and 5-year CDs  by using the below tool — powered by Bankrate — to compare CD rates. 

Money market deposit account (MMDA)

A money market deposit account (MMDA) is a type of savings account offered by banks and credit unions. The money you deposit earns interest at a variable rate, though the APY tends to be higher than a traditional savings account. The rate depends on the financial institution and the size of the balance in your account. MMDAs may come with a debit card or checks that you can use to withdraw money. 

Important to remember:

• MMDAs are good for storing short-term cash for your emergency fund and for large and infrequent expenses, such as college tuition or tax payments
• The number of allowed withdrawals can vary from bank to bank. However, you can usually make unlimited withdrawals and payments by using an ATM or by making the withdrawal in person
• Be careful when withdrawing funds as many MMDAs have a minimum balance requirement and sometimes impose monthly maintenance fees if you don't maintain the minimum balance

Health savings account (HSA)

Health savings accounts (HSAs) can be a powerful tool to help you save for future medical expenses. They offer multiple tax benefits you can take advantage of to lower medical expenses. But you have to be comfortable paying out-of-pocket for services and prescriptions that previously only cost you a co-pay.

Eligibility is limited to people with high-deductible health insurance policies. How high of a deductible? A minimum amount is set by the IRS and adjusted for inflation annually. For 2024, your policy must have a minimum annual deductible of $1,600 for individuals (up from $1,500 in 2023) and $3,200 for families (up from $3,000 in 2023.) The maximum annual deductible and out-of-pocket expenses cannot exceed $8,500 ( up from $7,500 in 2023) and $16,100 (up from $15,000 in 2023) respectively.

As long as your policy meets that threshold, you can open an account. You may contribute up to $4,150 (up from $3,850 in 2023) if you have a self-only policy, or $8,300 (up from $7,750 in 2023) for family coverage. In 2024, catch-up contribution limits for taxpayers 55 and older remain unchanged at $1,000. 

Important to remember:

• HSA funds can only be used to pay qualifying medical expenses and penalties will apply if the funds are used for non-qualifying expenses 
• Even if you don’t itemize your deductions, you can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA 
• The contributions remain in your account until you use them 

529 College savings accounts

529 plans are an easy way to get started saving for college. One of the benefits of 529 plans is the tax-free earnings that grow over time. The longer your money is invested, the more time it has to grow and the greater your tax benefits.

Many states offer tax benefits for contributions to 529 plans. You may only be eligible for these benefits if you invest in a 529 plan sponsored by the state where you reside. Earnings in a 529 account are not subject to federal income tax, and in many cases, state income tax, if withdrawals are used for qualified higher education expenses or tuition for elementary or secondary schools.

Note that a well-funded 529 plan may impede a college applicant from receiving financial aid. A recent policy change now allows for a grandparent loophole to maximize 529 savings. Another change allows students to invest leftover 529 plan funds into an IRA.

Before you start exploring 529 plans and their rules — you need to get familiar with some jargon. The person who opens a 529 plan account is called the account holder or the saver. The person the account is opened for is called the beneficiary or the student, and the account holder can also be the beneficiary.

There are two types of 529 plans: 

Prepaid tuition plans let a parent purchase units or credits at participating colleges and universities (usually public and in-state) for future tuition and mandatory fees at current prices for the student/beneficiary. Prepaid tuition plans usually cannot be used to pay for future room and board at colleges and universities. Such plans also cannot be used to prepay for tuition for elementary and secondary schools.

Education savings plans let you open an investment account to save for your beneficiary’s future qualified higher education expenses — tuition, mandatory fees and room and board. Withdrawals from education savings plan accounts can generally be used at any college or university, including sometimes at non-U.S. colleges and universities.

All education savings plans are sponsored by state governments, but only a few have residency requirements for the saver and/or beneficiary. This means you are not locked into using the 529 plan where you live. You can shop around. 

State governments do not guarantee investments in education savings plans. FDIC protection is not automatic and varies with education savings plan investments.

Important to remember:

• Education savings plans can also be used to pay up to $10,000 per year per beneficiary for tuition at any public, private or religious elementary or secondary school. There is no annual limit on how much you can withdraw for qualified college expenses
• Distributions will be subject to state and federal income taxes and an additional 10% federal tax penalty on earnings if withdrawals are used for non-qualified higher education expenses or tuition for elementary or secondary schools 
• 529 plan distributions of up to $10,000 can be used to repay qualified student loans of the beneficiary 

Individual retirement accounts (IRAs)

Is it ever too early to save for retirement? Opening and funding an IRA is a great start and especially useful if you are self-employed or if your employer doesn’t offer a retirement plan. You can open an account with a bank or brokerage. The best place to open an account is at financial institutions with investment options that match your investment profile. The type of investments your account holds will determine if your account qualifies for FDIC protection. 

Traditional and Roth IRAs

A traditional IRA is a way to save for retirement that gives you tax advantages. You can claim a tax deduction for your contributions and pay taxes on the account earnings when you take a distribution. Roth IRAs don’t provide tax relief upfront.  You contribute after-tax dollars to your Roth IRA and your distributions are fully tax-free at the federal level. 

For 2024, the total yearly contributions limits for traditional IRAs and Roth IRAs can't be more than $7,000 (up from $6,500 in 2023)  or $8,000 if you're age 50 or older (up from $7,500 in  2023) or less if your taxable compensation for the year exceeds modified adjusted gross income (MAGI) limits. Your deduction could be further reduced if you or your spouse are covered by a retirement plan at work. 

Important to remember:

• To contribute to an IRA, you must have earned income, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment 
• If you’re married and don’t work but your spouse does, then he or she can contribute to a spousal IRA for you
• Kids can jump-start their retirement savings by opening and contributing to an IRA, as long as they have a job

The bottom line

When choosing a savings account, it’s important to remember that you don’t have to pick just one. Depending on what you want to achieve financially, you may decide to open a traditional savings account, CD account, money market account and/or a specialty account. To find the best account for your needs, consider your financial goals, timeline and tolerance to risk. 

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While graduating from school is a major milestone in your life, it's not the last big step you'll take in the months ahead. Preparing yourself for your future can take any number of pathways depending on your specific goals. But whether you'll be buying a new car, saving up for a home or delving into the stock market, there are a few key financial steps you can take that will help you achieve success.

As noted leaders in the financial space, the members of Kiplinger Advisor Collective recommend taking one or more of the following actions with any gift money you may have received for graduation. Doing so will help you start adulthood — and your financial future — off on the right foot.

Invest early

"Start investing early if you want financial security. The key is to let compound interest work its magic through broad index funds or exchange-traded funds while using the right investment accounts, such as Roth IRAs, which serve as both investment and super emergency savings accounts. Contributions are penalty and tax-free, and the principal and earnings grow tax-free over time. Remember, finance can come off as daunting because of the jargon, but don't be afraid to ask questions. The more informed you are, the better financial decisions you'll make." — Ramona Ortega, My Money My Future

Take advantage of interest rates

"Take advantage of the highest interest rates possible with the most financially sound bank or credit union. Then, save or spend the interest. If the money is not needed, max out a Roth IRA or Roth 401(k) for retirement. If the student is a parent, buy life insurance while it's cheap." — Shawn Plummer, The Annuity Expert

Sharpen your income-producing skills and knowledge

"The best thing a young person can invest in is their skills and education, namely their income-producing skills and financial education. These two investments will show them how to make, save and invest millions more dollars over the course of their lifetime. Making this investment at an early age will compound their returns since they have so much time on their side." — Tyler Wright, Defining Wealth LLC

Leverage a high-yield savings account

"Right now, the best thing you can do is put your financial gifts into a high-yield savings account that earns at least 4% interest. This return is the highest we’ve seen in 15 years and close to the inflation rate, so your money won’t lose value while you decide what to do with it next." — Andrew Schrage, Money Crashers LLC

Build your net worth

"Investing in things like real estate or assets that will build your net worth that you could borrow against is always a valuable start to your career. If you can create passive income from these assets, it can set you up for long-term success with a steady flow of cash." — Angela Ruth, Due

Start a side business

"Invest in yourself. I would recommend starting a business or a side hustle as soon as you can. The education you receive from launching and running your own business is priceless." — Clay Bethune, Fintech Finance Group

Consider your time horizon

"The monetary gifts that high school- and college-aged students want to invest should be looked at in the context of how long their time horizon is. If they're looking to save for short-term time horizons, CDs and short-term bond funds should be reviewed. For time horizons over six to 10 years, I'd recommend students invest the gifts in a Roth IRA if they have any earned income. Roth IRAs have the benefit of growing tax-deferred and can be withdrawn at retirement tax-free to complement traditional IRAs and 401(k)s. Otherwise, I would suggest allocating over multiple mutual funds and/or ETFs." — Eric Kala, Avid Wealth Partners

Consider keeping your gift in cash

"Consider keeping that money in cash to form a financial foundation. This will also give you the flexibility to navigate the job market and your adult life." — Douglas Boneparth, Bone Fide Wealth, LLC

Think about what your future entails

"Invest in what will be most significant to you in regard to where you want to be in the future. Whether you want to start a business, get a rental or attend college, you want to make sure those goals are taken care of by investing for the future." — Nicholle Overkamp, Wilcox Financial Group, LLC

Do everything in moderation

"I am a firm believer in saving, but I also think moderation is key. When you receive financial gifts, use a small amount to treat yourself. You can save the rest in a high-yield savings account, retirement fund or in a well-placed investment." — Trae Bodge, Trae Bodge Media, LLC

Keep cash in a liquid account

"High school and college graduates should consider keeping their monetary gifts in a liquid account following graduation. Let's be real — the costs of attending a trade school, college or university are rising, and having extra cash to "invest" in their college experience, cut down on the cost of books, set up their next living arrangements or have extra cash to enjoy life is definitely a great way to celebrate the accomplishments." — Lyndsey Monahan, Women Inspire Wealth

Do your research

"Read about different investment strategies (value, growth, index, tactical, etc.) and pick one that makes sense to you. This way, you can have a consistent approach and the discipline to invest your money." — Bill Hortz, Institute for Innovation Development

Cover short-, mid- and long-term strategies

"I recommend separating those savings between short-term, mid-term and long-term strategies. By doing this, they can take care of immediate needs and also get a head start with compound interest." — Maria Puche, Wealth Armor

Invest in your well-being

"The best place you can invest in is yourself, your education, your peer group and your health. Any of these areas can make a dramatic impact on the long-term success you can have. Investing in your education may come in the form of actually using that money to buy assets that ideally produce some sort of cash flow such as real estate or low-maintenance operating companies. In some cases, it just involves a down payment to make that investment or you can find a seller to finance the deal with no money down." — Justin Donald, Lifestyle Investor

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Earlier this year, Apple launched a new savings account in partnership with Goldman Sachs, and it offers a rate significantly higher than the national average. Since it's launch in April, the Apple Card’s high-yield savings account has reached over $10 billion in deposits from users. 

“We are very pleased with the success of the Savings account as we continue to deliver seamless, valuable products to Apple Card customers, with a shared focus on creating a best-in-class customer experience that helps consumers lead healthier financial lives,” said Liz Martin, Goldman Sachs’s head of Enterprise Partnerships in an Apple press release.

The account offers an impressive rate of 4.15%. For comparison, the current national average APY on savings accounts is only 0.42%, according to the FDIC. However, since last year, rates for high-yield savings accounts have shot up, and many of the top high-yield accounts now offer savings rates of over 4%.  

The Federal Reserve has been continually hiking interest rates over the last year in an attempt to ease high inflation rates. As a result, customers realize higher commercial interest rates, and in turn spending goes down. The silver lining to this is that in many cases, when interest rates rise, so do savings rates.

"Savings helps our users get even more value out of their favorite Apple Card benefit — Daily Cash — while providing them with an easy way to save money every day,” Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, said in a press release.

By using our new tool, in partnership with Bankrate, you can compare current savings rates below. 

Apple Card Savings Account 

In order to open Apple’s new savings account and take advantage of its high savings rate, you’ll need to have an Apple Card. An Apple Card is Apple’s own credit card, offering 3% Daily Cash on Apple purchases, as well as on purchases from select merchants when using your Apple Card or Apple Pay. Plus, you’ll get 2% Daily Cash on any other purchases made with your Apple Card or Apple Pay. 

The account has no fees, no minimum balance requirements and no minimum deposit. With this account, Apple hopes to offer a “seamless” approach to managing your money. 

Bailey states, “Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly — all from one place.” 

Users can set up and access the savings account with an easy-to-use dashboard in Wallet. From there, users can keep track of interest earned, check their account balance and deposit cash or make withdrawals to a linked bank account or Apple card. After setting up a savings account, any Daily Cash earned from your Apple Card will be deposited automatically into your account. 

Apple recently shared that 97% of Apple card users have chosen to have their Daily Cash automatically deposited into their account.

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• Best 5-Year CD Rates 
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If you're looking for a place to store and grow your savings, you have multiple options. Two popular choices are certificates of deposit and high-yield savings accounts.

Both offer you rates that outpace inflation. That's important too, given that the price of everyday goods will rise due to increased energy costs. Outside of that, they do have distinct differences you'll want to keep in mind when choosing which one works best for your needs.

With these things in mind, we'll take a look at the features of each and what to consider before signing up. That way, you find the right one to grow your savings.

When to choose a CD 

A certificate of deposit (CD) is a type of savings account that holds a set amount of money for a fixed period, ranging anywhere from 3 months to 5 years. Unlike high-yield savings accounts, you won't be able to withdraw cash from a CD before its maturity date. Doing so will result in fees that can offset any interest earned (unless you have a no-penalty CD account).

Furthermore, CD rates are higher than those on traditional savings accounts at brick-and-mortar banks, and in many cases, some of the best CD rates on the market offer an APY of 4% or higher.

Another notable aspect of CDs is that interest rates are locked in when opening a CD account, meaning if the Federal Reserve decides to cut interest rates later this year, it won't impact your term if you sign up now.

Use this Bankrate tool to find a CD term that works for you:

Because your money is locked away for a fixed period, CD accounts aren't a good option for cash you may need quick access to, like in an emergency fund. Meanwhile, CD accounts are good for saving for a particular goal, such as a future purchase, like a new car, or an event, like a wedding.

For example, if you know you’re going to buy a car in three years, opening a three-year CD can help build your savings with minimal effort and resist the temptation to spend your cash.

CDs offer a fixed, predictable rate of return on your savings. Our savings calculator tool can help you determine just how much you’ll earn in compound interest once your CD reaches maturity.

When to choose a high-yield savings account

A high-yield savings account functions in the same way as a traditional savings account, but with one main difference: High-yield savings accounts pay a higher-than-average APY on deposits.

In fact, many of the best high-yield savings accounts offer well over 4%. However, unlike CDs, rates on high-yield savings accounts are not fixed, meaning if the Fed cuts rates again in the future, your savings rate will drop as well.

As with CDs, be sure to review any fees or balance requirements before opening an account.

You can shop around and find the right account quickly, using this Bankrate tool:

There’s no term length associated with a high-yield savings account, as cash is readily accessible. Unlike CDs, you won’t be charged a fee for withdrawing your cash, unless you use an out-of-network ATM.

Because of this, high-yield savings accounts are better suited towards savers who want quick access to their money, should an emergency arise.

They are also convenient for savers looking to add regular deposits. You can set up automatic transfers from your checking account to your savings to meet future goals.

Bottom line on CDs vs. high-yield savings accounts

Both options help you grow your money and outpace inflation. CDs work best if you can put aside a portion of your money and don't touch it. They're also wise choices for savers looking to lock in high rates regardless of future Fed policy.

Meanwhile, high-yield savings accounts are better for people who want to earn a high rate of return, but also need quick access to their cash. In either case, make sure to shop around to find the best rates, and pay close attention to any fees associated with the account.

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The Federal Reserve didn't cut interest rates at its latest meeting, thanks in part to a weakening job market. As such, it gives savers more time to capitalize on higher rates.

When looking for savings options, two options include a high-yield savings account and a money market account. High-yield savings accounts have been somewhat resilient during the Fed's rate-cutting spree last year. Meanwhile, money market accounts give you the higher rates of a savings account, with the flexibility of a checking.

Torn on which one to choose? We'll compare both options based on accessibility, risk, returns and more to help you choose the best fit for your needs.

Which savings account is easiest to access cash?

Most money market accounts make accessing your funds easier than high-yield savings accounts.

This is because money market accounts usually offer check-writing privileges, and in some cases, even allow you to pay directly from your account with a debit card or easily pull cash from an ATM.

Check out some of the best money market accounts:

On the other hand, to spend the money in a high-yield savings account, you’ll often have to connect the account to an existing checking account and then transfer funds from one account to the other, making it a bit more difficult to access your cash.

For this reason, if an emergency arises and you need quick access to your savings, a money market account has an advantage over a high-yield savings account.

Which option is less risky?

Both money market accounts and high-yield savings accounts are solid choices if you're looking for a risk-free way to maximize your savings. This is because both high-yield savings accounts and money market accounts offered by banks or credit unions are FDIC or NCUA-insured.

This means that if your bank fails and goes under, you won’t have to worry about losing your hard-earned cash. FDIC insurance protects up to $250,000 in individual deposit accounts and up to $250,000 for each person’s share of joint accounts.

NCUA insurance is similar, covering accounts held at credit unions. NCUA insurance covers up to $250,000 per credit union member. These protections cover accounts at both brick-and-mortar banks and online banks.

Which has a higher APY?

Both money market accounts and high-yield savings accounts possess much higher savings rates than traditional savings accounts, with some even offering 4.20% APY.

However, high-yield savings accounts sometimes beat out money market accounts when it comes to APY, so it’s important to compare rates before opting for one account over the other.

Opening a savings account with a high APY, whether it's a high-yield savings account or a money market account, is a no-brainer. You'll earn interest on your cash (free money!) with little effort on your part.

See our list of top money market accounts and best high-yield savings accounts to compare current rates today. You can also compare current rates among high-yield savings accounts by using the tool below.

What are the minimum balance and deposit requirements?

Many high-yield savings accounts have very low balance and deposit requirements, making them accessible to all people, even those with low savings balances.

You can see balance requirements and current rates for some of the best options below:

On the other hand, when compared to high-yield savings accounts, money market accounts often have higher minimum balance requirements. With a high minimum balance requirement, it's easier to fall below your account minimum, making you more likely to incur fees.

However, there are exceptions; you can find money market accounts with no or low balance requirements.

Bottom line on money market account vs high-yield savings account

Overall, both money market accounts and high-yield savings accounts have their pros and cons. So, when should you choose a money market account over a high-yield savings account?

Typically, money market accounts are better suited to people with larger amounts of money they’re looking to save, as they’ll be able to meet any minimum balance requirements and therefore avoid fees.

On the other hand, individuals who are just beginning to save and don’t have large amounts of cash should opt for a high-yield savings account (or a money market account with a low minimum balance requirement).

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Are you tired of watching your hard-earned money lose value to inflation and pesky bank fees? You're in luck then. The best high-yield savings accounts offer rates as high as 4.20%, with no monthly fees.

With a no-fee high-yield savings account, you'll have the benefit of a high APY, but you won't have to cut into your earnings by offsetting any additional monthly fees.

Now is a good time to secure a higher rate, which can help offset rising inflation. The latest CPI report showed prices are 4.2% higher than they were at this time last year, meaning everyday expenses like groceries, housing and services continue to cost more. One way to keep pace with inflation is by choosing the right savings account.

The best no-fee high-yield savings rates

Tips for finding the best no-fee high-yield savings rates

Before you open a no-fee high-yield account, there are a few things to keep in mind.

Look out for hidden fees: Brick-and-mortar banks and credit unions are more likely to have minimum balance requirements than online banks. In all cases, check what requirements, if any, exist before opening the account, so fees don't eat into interest earnings.

Ensure your money is safe: Another important consideration when opening a savings account is to verify that it is FDIC-insured, so you can be confident that your funds will be secure in the event the bank fails. The FDIC protects up to $250,000 in individual deposit accounts and up to $250,000 for each person's share of joint accounts. Credit Union members are also protected up to $250,000 through the NCUA.

Compare high-yield rates: It's a good idea to shop around for savings accounts to ensure you get the best rates. Usually, online banks offer more generous APYs on savings accounts, so changing from your traditional savings account at a brick-and-mortar bank to one online could be a good choice.

Avoid teaser rates: Teaser rates are promotional rates that banks use to attract new customers, but these are typically short-lived.

Rates are variable: Since interest rates on no-fee high-yield savings accounts are variable, the APY on the account can decrease from what it was when you first opened the account if the Fed cuts rates in the future.

Use the tool below, powered by Bankrate, to search further for some of today's top high-yield savings accounts available:

Pros and cons of no-fee high-yield savings accounts

Pros:

• Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you'll accrue more interest over time. Plus, interest in these accounts is compounded daily.
• Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank (or credit union) your account is with, your money will still be safe.
• Accessibility: While there are sometimes limitations to the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed.
• No minimum deposit requirements and/or fees: Many high-yield savings accounts charge a monthly fee and/or require a minimum deposit to earn the advertised APY, but no-fee accounts won't.

Cons:

• Not suited for long-term goals: If you're looking to save for long-term goals, such as retirement, other investments, such as stocks, are usually a better choice for your money.
• Variable interest rates: Since interest rates are variable, the APY on the account can decrease from the rate it was when you opened the account.
• Online banks: Since most high-yield accounts are offered by online banks, you likely won't have access to a physical branch, so contacting customer service can be more challenging.
• Transfers can be time-consuming: If you have a savings account with an online bank and a checking account with a traditional bank, it could take a few days to transfer funds from your savings to your checking account. Should you need immediate access to your savings, ensure you have an active ATM card available.

Bottom line on no-fee high-yield savings rates

If you're not saving your cash in a high-yield savings account, you're missing out on easy money. Many high-yield savings accounts offer impressive APYs that can help you bolster your savings with no effort.

If you opt for a no-fee account, you won't have to worry about paying a monthly service charge that can eat into the interest you've earned. And the APY you'll receive can help you keep pace with the rising prices of everyday goods.

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What is APY? Simply put, annual percentage yield (APY) is the amount of interest earned on a savings account in one year. It takes into account compounding interest — when both your principal balance and any garnered interest earn interest. Since simple interest only pays on the principal, accounts with a high APY can help you accumulate more cash on deposits.

And the longer you keep money in an account with a high APY, the more you'll earn, which is why long-term CDs are particularly attractive right now. Currently, both high-yield savings accounts and CD accounts are offering healthy APYs, in many cases around 4%.

Here's what you need to know about APY and how to score the best rates available.

How APY and compound interest work in your savings account

Opening an account with compound interest can be an easy way to maximize your savings. If you open a savings account with compound interest, you’ll earn interest on your savings (the principal balance) as well as on any interest you've accrued over the months. Depending on the account, interest can be "compounded" daily, monthly, quarterly or annually.

For example, if you put $2,000 into an account that pays 3% annual interest, you’ll earn $60 in interest after a year if it compounded annually. If it compounded daily, like many savings accounts typically do, you'd earn slightly more — $60.91 by the end of the year — because interest payments are being added to your balance over the year and you're now earning interest on those earnings as well.

Try our savings calculator to determine how much you'll save over time.

Use the tool below, powered by Bankrate, to find the top high-yield savings accounts available right now:

Opening a top-earning account to make APY work for you

APY is the biggest factor to consider when deciding where to deposit your savings. Both high-yield savings accounts and CDs usually offer higher APYs than traditional savings accounts, making them attractive savings vehicles for individuals looking for a fixed, predictable rate of return on their savings.

To score the highest rates possible, you'll need to compare several other factors besides APY between accounts, including minimum opening deposits and monthly fees. If you're opening a CD account, you'll need to carefully choose a maturity date that works for you financially.

Here's an example of how much you'd earn over time, depending on changes in your account's APY.

If you invested $1,000 five years ago, here's how much you would have today at different APYs (assuming your interest compounded daily):

As you can see, even a half-percentage point difference can result in a noticeable decrease in earnings on your cash.

Use the Bankrate tool below to compare rates across Certificate of Deposit (CD) accounts today:

Variable vs. fixed APY

The APY of an account can either be fixed or variable.

Variable APYs fluctuate with the market and are usually associated with savings and checking accounts. On the other hand, savings rates on accounts with fixed APYs won't fluctuate.

CD accounts have fixed APYs, so rates remain the same until the CD matures, which can happen in as little as three months or as long as five years, depending on the terms you choose.

The advantage of a variable APY is that it can increase when the federal funds rate rises. But that also means it will dip lower when rates drop. With a fixed APY, you know exactly how much your savings will earn over the fixed rate time period.

In reality, you usually want a mix of both. For savings you need access to, like an emergency fund, keep the cash in a HYSA with a variable APY. Your earnings will fluctuate, but you'll have immediate access to your funds whenever you need it.

For longer-term savings, like next year's vacation or saving up for a down payment, a CD account with a fixed APY allows you to lock in a rate today and know exactly how much you'll have the day that account matures.

APY vs. APR

APY and APR are sort of like two sides of a coin. As mentioned earlier, APY is the interest rate you earn on deposits. It compounds as your balance grows.

APR, or annual percentage rate, on the other hand, refers to the money you borrow rather than the money you save. It's the sum of the interest and any other fees you pay to borrow money.

APY example

You can calculate how much you'd earn in a savings account based on its APY by using the following formula:

APY = (1 + r/n)ⁿ – 1, where r= interest rate and n= the number of times the interest is compounded per year.

So, if you deposited $100 for one year at 5% interest compounded quarterly, the APY would be (1 + .05/4) * 4 - 1 = .05095 = 5.095%.

At the end of the year, you’d have $105.09.

Or, for an easier way to calculate how much you’ll earn, try our savings calculator.

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There’s no way to sugarcoat it: Yields on savings accounts, certificates of deposit and other safe places to park your cash are disappointingly low, and interest rates will remain in the dumps for a while. In response to the coronavirus crisis, last spring the Federal Reserve slashed short-term rates back to the near-zero levels at which they had hovered from late 2008 through most of 2015. “It’s pretty much ‘back to the future.’ We’re revisiting the territory that became all too familiar after the Great Recession,” says Greg McBride, chief financial analyst for Bankrate.com. Kiplinger expects rates to remain near zero through 2024.

Even keeping pace with inflation on your cash holdings is a tough prospect. Annual inflation recently ran at 1.4%, and nearly all the top-yielding savings accounts and money market deposit accounts offer less than 1%. The Fed has stated that with inflation running persistently lower than its long-term goal of 2%, it will aim to achieve inflation “moderately above 2% for some time.” That means that at least for a while, the Fed doesn’t expect to raise interest rates even if inflation starts to accelerate.

Savers who struggled to scrounge up a respectable yield during the last low-rate period may notice that the pickings are even slimmer this time around. Ken Tumin, founder of DepositAccounts.com, notes that rates for several savings accounts and certificates of deposit from online banks and credit unions have fallen to lower levels in the past several months than they did when account rates last bottomed out, around 2012 and 2013. Many banks saw a surge in deposits in 2020 as consumers stepped up their savings rate, reducing the banks’ desire to lure savers with competitive interest rates, says Tumin.

Despite the dim outlook, seeking accounts with above-average rates is worthwhile. If you put $50,000 in a savings account yielding 0.75% (compounded monthly) and maintain that rate for a year, you’ll pocket $376 in interest earnings. If you instead use an account yielding 0.09%—the recent national average, according to Bankrate—you’ll have only $45 in interest after a year.

Here, we’ve highlighted several ways to earn a relatively strong yield without sacrificing safety. All the deposit accounts come with protection against bank failure, with up to $250,000 insured per depositor at each bank or credit union. (To calculate whether your balances are covered, use the tools at edie.fdic.gov and mycreditunion.gov) And savings bonds are backed by the full faith and credit of the U.S. government.

The accounts listed here are available to customers nationwide. Rates are as of November 6 and are subject to change, so be sure to confirm the current rate before you open an account. To see current top rates at institutions both near you and nationwide, visit DepositAccounts.com, where you can choose the type of account you’d like to open, then enter your deposit amount and zip code.

Checking Accounts

If you’re looking for a no-fuss checking account, you’ll likely have to settle for a rate well under 1%. One exception: The no-fee, online T-Mobile Money checking account offers a 1% interest rate even to those who are not customers of the company’s wireless services. T-Mobile and Sprint wireless customers who deposit at least $200 monthly into the account get an impressive 4% rate on balances of up to $3,000 and 1% on the portion of the balance higher than $3,000.

Digital Federal Credit Union recently offered 0.5% on up to $100,000 in its free checking account if you activate the “Earn More” feature, which sweeps your funds into FDIC-insured accounts with partner institutions (you retain normal access to your money). The credit union is temporarily refunding all out-of-network ATM charges; typically, you must have a direct deposit and make five transactions per month to get $300 in fees reimbursed yearly. You can become eligible for Digital membership if you join a partner organization, such as Reach Out for Schools (the membership fee starts at $10), and deposit $5 into a savings account.

The free, online checking account from FNBO Direct yields 0.4%, but the account does not come with check writing. To move money out of the account, you can use a debit card, make online transfers or pay other people with peer-to-peer payment service PopMoney. TIAA Bank offers a fixed 0.4% yield for the first year (0.12% thereafter) on up to $250,000 in its free Yield Pledge Checking account, and you get unlimited reimbursement of ATM withdrawal fees if you keep at least $5,000 in the account, or up to $15 in ATM fees refunded monthly if you have less than $5,000.

More-Rewarding Accounts

You can earn a considerably higher yield on your checking balance if you’re willing to jump through some hoops, such as making several monthly purchases with your debit card, having a direct deposit and using online banking features. The rates on high-yield checking are often better than what you can get with a savings account, so you may consider keeping some of your savings stash in one of these accounts, too.

Consumers Credit Union (based in Illinois) has long offered chart-topping rates on its Rewards Checking account. You get 4.09% on up to $10,000 if you make at least 12 debit card transactions monthly; have at least $500 monthly in direct deposits, mobile check deposits and transfers into the account; spend at least $1,000 monthly on a CCU Visa credit card; and receive electronic statements. You get a 3.09% rate if you spend $500 on the credit card monthly and meet the other requirements, and a 2.09% rate if you do not use the credit card but meet the other requirements. All out-of-network ATM fees are reimbursed if you meet the monthly requirements. Anyone in the U.S. can join CCU by paying a one-time, $5 fee to the Consumers Cooperative Association and depositing $5 into a savings account.

The free Vertical Checking account from Evansville Teachers Federal Credit Union yields 3.3% on up to $20,000 if you make at least 15 monthly debit card purchases, have a monthly direct deposit, log in to online or mobile banking monthly, and receive electronic statements. The account refunds up to $15 monthly in ATM surcharges if you meet the activity requirements. Anyone in the country can join the credit union by donating $5 to the Mater Dei Friends & Alumni Association and depositing $5 in a savings account.

One free account with a long track record is Rewards Checking from Axos Bank. It has offered a rate of 1.25% since 2011, says Tumin, and the rate applies to balances of up to $150,000. You’re eligible for the 1.25% yield if you have monthly direct deposits of at least $1,000 and make 15 debit card purchases (minimum $3 per transaction) monthly. Plus, you get unlimited reimbursement of out-of-network ATM fees.

Savings and money market accounts

Savings accounts and money market deposit accounts are prime places to store your emergency fund—a backup cash stash that you can tap if you have a sudden loss of income or an unexpected expense. They are also good parking spots for other money that you’d like to set aside for a goal, such as a vacation or a big purchase.

Among savings accounts, the free, online account from ConnectOne Bank recently offered one of the best available rates: 0.9% on balances between $2,500 and $250,000. First Foundation Bank has a 0.75% yield on its online savings account ($1,000 opening deposit but no ongoing minimum required). The free savings accounts from Live Oak Bank (0.7% yield) and SFGI Direct (0.67% yield) have consistently had strong yields over the past few years.

Several prominent internet banks, including Ally Bank, American Express , Marcus by Goldman Sachs and Synchrony recently matched one another with a 0.6% rate on their free, no-minimum savings accounts. Notably, Synchrony’s account comes with an ATM card, and the account refunds $5 monthly in ATM fees. At 0.61%, the rate on Axos Bank’s free savings account is a smidge higher. If you prefer to keep your savings and checking with one institution, consider Ally or Axos—both offer free checking accounts.

If you’re physically active—or are looking for more motivation to exercise—check out Fitness Bank. Its savings account yields 0.4% if you walk fewer than 5,000 steps a day, on average—or 0.5% if you’re at least 65 years old—but if you step up your walking regimen, the yield jumps. You get 0.85% if you walk an average of at least 12,500 steps a day (10,000-step minimum if you’re 65 or older), 0.75% if you walk at least 10,000 steps daily (7,500 steps for those 65 or older), 0.65% for walking at least 7,500 steps (5,000 steps if 65 or older), and 0.55% if you walk at least 5,000 steps. To count steps, link a fitness tracker such as a Fitbit or an Apple Watch to Fitness Bank’s step-tracking app. You must keep $100 in the account to avoid a $10 monthly fee.

Top Money Market Accounts

Money market deposit accounts are similar to savings accounts but often come with a debit card or check writing for easy access to your money. To get the best rates or avoid fees, you may have to meet certain activity requirements or keep a big balance.

Affinity Plus Federal Credit Union pays an outstanding 1.5% on balances of up to $25,000 (0.7% on the portion of the balance higher than $25,000) on its free Superior Money Market Account, which offers check writing and a debit card. But to get that rate, you must have a direct deposit of at least $500 into an Affinity Plus checking, savings or money market account and sign up for electronic statements. You can join the credit union by paying a $25 fee to the Affinity Plus Foundation and depositing $10 into a savings account.

The Impact Money Market account from National Cooperative Bank yields 0.91% on all balances, and you can request checks and a debit card. But to avoid a stiff $25 monthly fee, you must keep at least $5,000 in the account. The High Yield Money Market Account from CFG Bank yields 0.8% if you hold a balance of at least $25,000, but it does not come with check writing or a debit card. You must keep a minimum $1,000 balance to avoid a $10 monthly fee.

As with savings accounts, several banks are offering money market rates hovering at 0.6%. One of the best options is the free account from Axos Bank, which requires a $1,000 opening deposit (no ongoing minimum) and includes check writing and a debit card. The money market account from Northern Bank Direct yields 0.6% on up to $250,000, with no monthly fee. (If your balance is higher than $250,000, you get 0.25% on the entire amount.) You must make a $5,000 opening deposit (no ongoing minimum required) and it comes with an ATM card.

Certificates of deposit

With a CD, you agree to keep your money in the account for a certain period in exchange for a guaranteed interest rate during that time. If you decide to reclaim the money before the CD matures, you’ll usually owe an early-withdrawal penalty, which may range from a few months’ worth of interest to a year or more of interest. If you’d like to hedge your bets—especially if you invest in CDs with maturities of a few years or more—look for certificates with light early-withdrawal penalties. Ally Bank, for example, penalizes you a relatively forgiving 150 days’ worth of interest on its five-year High Yield CD (no minimum amount required), which recently yielded 1%.

If you have a CD nearing its maturity, shop around for the best interest rate rather than letting it renew at the institution’s current rates, which may be considerably lower than the previous rate you earned. The highest rates on one-year CDs aren’t much better than those of the top-yielding savings accounts, and five-year CD rates don’t offer much of an advantage over yields on CDs with shorter terms. But for long-term savings that you’re willing to lock away for a while, you may be able to squeeze out a little more yield than you can get with your savings account—and you can rest easy knowing that the interest rate won’t fall during the CD’s term.

Recently, you could get a 0.95% yield with a one-year term, or a 0.9% yield with a six-month term, on CDs from CommunityWide Federal Credit Union ($1,000 minimum deposit). You can join the credit union by making $5 donation to an affiliated organization, including Michiana Goodwill Boosters or Habitat for Humanity Helpers, and depositing $5 into a savings account. State Bank of Texas offers 0.95% on a one-year CD with a $25,000 minimum deposit.

Pen Air Federal Credit Union offers one of the leading rates for a five-year CD, at 1.35% with a minimum deposit of $500. Its early-withdrawal penalty is 180 days’ worth of interest. For membership eligibility, Pen Air will make a $1 donation on your behalf to the Friends of the Navy–Marine Corps Relief Society, and you must deposit $25 into a savings account. Hiway Credit Union also offers 1.35% on a five-year CD, but the minimum deposit is $25,000. If you withdraw money early from a five-year CD from Hiway, you’ll owe one year’s worth of interest. To become a member of Hiway, join the Minnesota Recreation and Park Foundation, with a $10 fee, or the Association of the U.S. Army ($40 for a two-year membership), and keep $5 in a savings account.

Savings bonds

Savings bonds are another option for long-term cash holdings. Series EE and Series I bonds are not redeemable the first 12 months you own them, and if you cash them out before five years have passed, you’ll owe a penalty of three months’ interest. One nice benefit is that you pay no state or local income tax on savings bond interest, and you can defer federal income tax until you redeem the bond or when it reaches maturity in 30 years, whichever comes first. You can purchase up to $10,000 in EE bonds and $10,000 in I bonds per year.

I bonds are a bright spot at a time when yields on many other savings options trail inflation. The bonds combine a fixed interest rate, which remains the same for the life of the bond, with an inflation rate that is based on the consumer price index and resets every six months. The two rates form a composite yield, which is 1.68% for those who purchase I bonds between November 1, 2020, and April 30, 2021. That’s a higher rate than you can get with even the top-yielding five-year CDs. And adjustments to the inflation component of the bonds should help your savings keep up with inflation.

Series EE bonds purchased between November 1, 2020, and April 30, 2021, earn a measly 0.1% interest. But if you’re willing to hang on to the bond for a couple of decades, it becomes a more attractive investment: After 20 years have passed, if interest earnings haven’t caused the EE bond to double in value, the Treasury will make a one-time adjustment to bring the bond’s value to twice the purchase price. That’s a guaranteed return of about 3.5%.

Get a high rate on the go

If you spend a lot of time on your smartphone, you may not mind doing all of your banking on the device, too. These two mobile banks, which operate primarily through a smartphone app, offer noteworthy yields.

Chime offers a free “Spending” account, which comes with a debit card, plus a free savings account that recently yielded 1% on all balances. (You must have a Spending account to use the savings account, and you can transfer money into the savings account only from Spending.) Each time you use your debit card for a purchase or bill payment, Chime automatically rounds up the transaction to the nearest dollar and deposits the difference into your savings account. You can withdraw money with the debit card at 38,000 ATMs nationwide fee-free.

Like Chime, Simple offers a free basic checking account for everyday spending. You can pair it with the free “Protected Goals” checking account, which yields 0.6% on all balances and is designed to hold money that you’re saving for future expenses. You can instruct Simple to round up debit-card purchase amounts to the nearest dollar and transfer the difference to Protected Goals, and you can use budgeting tools to see your progress toward savings goals, such as going on a vacation. You can access 40,000 ATMs fee-free with Simple’s debit card.

Both of these financial-technology companies partner with institutions insured by the Federal Deposit Insurance Corp. to hold your funds, and they have been established for several years. Take caution, however, with tech companies that are newer to the game of offering bank accounts. Customers of Beam, a mobile bank that launched in the fall of 2019, recently had problems withdrawing money from their accounts. When investing app Robinhood first announced a checking and savings account in 2018, it claimed that customers’ funds would be covered by the Securities Investor Protection Corp., which protects brokerage accounts. The SIPC disputed the claim, and Robinhood later introduced a cash management account that sweeps funds into FDIC-insured bank accounts.

Build a CD ladder

A CD ladder is a tried-and-true method to ensure that a portion of your savings will regularly become available to capture current interest rates, while the rest of your money benefits from the higher rates that longer maturities offer. Divvy up your pot of money dedicated to CDs among several maturities—say, $5,000 each in CDs with maturities of one, two, three, four and five years. When a CD matures each year, you can reinvest the money at current rates or use it for other needs. If you reinvest, one option is to put the money in a five-year CD each year after your initial investment in CDs of various maturities, suggests Tumin. You’ll eventually have all of your money in five-year CDs, with one CD reaching maturity each year.