The Federal Reserve hasn't cut interest rates this year, giving savers ample time to capitalize on higher rates of return. That said, prices on everyday items continue to increase, and Fed policy could change heading into the fall.
The Kiplinger Letter projects that rate cuts will happen closer to the end of 2025. The reason the Fed waits is that it wants to see how President Donald Trump's tariffs affect consumers' long-term inflation expectations.
Currently, Core CPI is on a continual upswing, sitting at 2.9%. This is where the July and August CPI reports can paint a better picture of how much inflation rises. The Fed is meeting this week, and you can follow Kiplinger for updates on it.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In the meantime, with prices rising and rate cuts looming, you don't have long to capitalize on higher rates of return. Here are the top options to consider.
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 you carry throughout the term.
So, even if 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, where your money remains 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 three to 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 fall, when the Fed is more likely to cut rates. Being proactive will help you maximize savings opportunities while keeping ahead of rising costs.
Related content
-
Medicare Prior Authorization Expands to Ambulatory Surgical CentersStarting in December, Medicare will begin requiring prior authorization for certain procedures when performed in ambulatory surgical centers.
-
Frontier’s GoWild! Annual Flight Pass: Is the $299 All‑You‑Can‑Fly Deal Worth It?Frontier’s GoWild! Pass offers unlimited flights for $299, but blackout dates, standby rules, and fees apply. See who benefits and if it’s worth it.
-
Frontier’s GoWild! Annual Flight Pass: Is the $299 All‑You‑Can‑Fly Deal Worth It?
Frontier’s GoWild! Pass offers unlimited flights for $299, but blackout dates, standby rules, and fees apply. See who benefits and if it’s worth it.
-
Seven Guilt-Free Ways to Spend Your Retirement CashYou may be reluctant to spend in retirement, but if you have the extra cash, here are seven ways you'll feel good doing it.
-
$425 Million Google Class Action Lawsuit: Do You Qualify for a Payout?Google was found liable for violating the privacy of 98 million users in a class action lawsuit. Are you one of them?
-
What Dave Ramsey and Caleb Hammer Taught Me About Handling MoneyFrom Ramsey’s strict discipline to Hammer’s blunt reality checks, their lessons reveal how to save, invest and prepare for the future.
-
Walmart Plus Members Will Soon Have Their Choice Between Two Streaming ServicesDiscover which streaming service is coming to the platform.
-
Help! My Car Was Totaled. Should I Repair and Keep Driving It or Buy a New One?Does it ever make sense to keep a totaled car? Maybe, but you need to consider these factors first.
-
Are High-Yield Savings Accounts Still Outpacing Inflation?Some savings accounts give you the ability to outpace inflation, lessening its impact on your finances.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial PlannerScams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.
