High-Yield Saving Options Before Rate Cuts Hit

The Federal Reserve hasn't cut interest rates this year, giving savers ample time to capitalize on higher rates of return. However, this will soon change.

The Fed meets next week, with CME FedWatch projecting a 95% probability the Fed will cut rates by 25 basis points. Why? They're concerned that the lack of job growth outweighs the rising costs from inflation.

With this in mind, you'll want to devise a plan now, with the expectation that there will be at least one, potentially two cuts happening this year. Thankfully, high-yield options still hold the promise of higher returns, even with a slight dip from rate cuts. Here are your best options to consider.

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CDs: A Fed-resistant way to save

CDs won't earn you the highest rates of return, but they come with a protection other savings options don't have: A fixed APY. That means if you lock in a longer-term CD now, the rate you lock in will be the same rate you carry throughout the term.

So, even when the Fed cuts rates, as our team projects, you'll stay ahead of the curve, with many CDs earning over 4%. Short-term CDs, such as a six-month option from ableBank, earn you a 4.50% return on your deposit.

Using this Bankrate tool can help you compare and find the best CD rates for you:

A few things to consider with a CD:

You can't add to your initial deposit
Early termination penalties are steep if you need access to your cash
Some banks renew your CD automatically, so set a reminder before it matures

Who they work best for: Risk-averse savers or those nearing retirement who want a guaranteed rate of return that won't change with Fed policy.

Keep things fluid with a high-yield savings account

High-yield savings accounts (HYSA) offer more fluidity. You can access your money whenever you need to, unlike CDs, which keep your money tied up until maturity.

Right now, you can earn well above 4% for most accounts. Our top pick, Newtek Bank, offers you returns of 4.35%

A few things to remember about HYSAs:

They feature variable interest rates, so if the Fed cuts rates, your returns will be lower
Some banks have minimum balance requirements or you'll have a monthly fee
Most of the best rates come from internet banks, so it's wise to switch all your accounts to them for easier cash access

Who they worked best for: Savers wanting quick access to their cash for unexpected expenses or to quickly pivot to other strategies.

Reach retirement benchmarks with investments

Historically, a diversified portfolio of stocks, mutual funds and bonds earns you a higher return than CDs or HYSAs.

You can also tailor your investment strategy based on your risk tolerance and retirement goals. Many brokerages have advisory services that can help you reach your goals and suggest options if performance isn't optimal.

Shop for adviser options with this Bankrate tool:

Things to keep in mind with investments:

Returns are not guaranteed
Harder to access your cash if you need it, with substantial tax consequences
Fee-based advisers can eat into returns

Who they work best for: Savers who already have an emergency fund of six months of expenses, who are also looking to reach retirement goals and keep their money ahead of inflation.

Ultimately, now is a great time to review your savings and retirement goals. Rates remain high, at least until the Fed starts cutting rates next week. Being proactive will help you maximize savings opportunities while keeping ahead of rising costs.

Sean is a veteran personal finance writer, with over 10 years of experience. He's written finance guides on insurance, savings, travel and more for CNET, Bankrate and GOBankingRates.