The Federal Reserve met this week and refrained from changing the federal funds rate, citing an increased uncertainty on the economic outlook as reason for the wait and see approach.
After ending 2024 with three consecutive rate cuts, the Fed has refrained from making rate cuts for the first four meetings of 2025. It also gives savers some breathing room...at least for now.
However, that doesn't negate the fact that inflation continues to place stress on budgets. Core inflation is around 2.8%. While lower than anticipated, the recent CPI report didn't include how tariffs will influence the data.
Sign up for Kiplinger’s Free E-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.
Bankrate's chief financial analyst Greg McBride remarks, "The Fed statement noted the risks of both higher unemployment and higher inflation have increased. How the data unfold in the coming months will dictate the Fed’s path. It’s going to be an interesting summer.”
How to cushion inflation
While you might not be able to withstand inflation's impacts directly, there are ways to cushion your money to reduce its effect. And one of the best options is high-yield savings accounts. McBride adds, "Savers will continue to enjoy returns that outpace inflation if the money is parked in the most competitive savings accounts."
A high-yield savings account allows you to earn a high rate of return. Unlike certificates of deposit, you can add money to these savings accounts at any time.
And you can withdraw or transfer those funds when you need them. Just be careful of any minimum balance requirements that might apply or else your monthly fee might offset the interest earned.
Using this tool from Bankrate, you can see how rates currently measure up:
There are other considerations with a high-yield savings account. Chief among them is they come with variable interest rates. If the Fed decides to cut rates in the future, your savings rates can drop too.
In the meantime, if you're looking for a flexible way to save money, it's hard to beat the rates offered. Here are some of the top high-yield savings accounts we recommend:
Account | APY | Min. opening deposit |
|---|---|---|
4.35% | $0 | |
4.30% | $100 | |
4.30% | $500 | |
4.25% | $0 | |
4.25% | $100 | |
4.25% | $1,000 | |
4.25% | $5,000 |
Use budgeting apps to meet savings goals
Sometimes, a fresh perspective on where your money goes helps you identify spending patterns, and with them, opportunities for more savings. Some of our favorite budgeting apps are easy to use, affordable and can help you meet your savings goals.
One of the easiest to use is Quicken's Simplifi.
The bottom line
The Fed held steady and refrained from cutting rates at their current meeting. This is great news for savers, as it means you can still secure a higher rate of return.
Against inflation, high-yield savings accounts can help, as they offer a higher rate of return that cushions your finances some from it.
Related content
-
How to Invest as the AI Industry Grows UpHere’s where to find the winners as artificial intelligence transitions from an emerging technology to an adolescent one.
-
I’m 62 and worried about Social Security’s future. Should I take it early?A Social Security shortfall may be coming soon. We ask financial experts for guidance.
-
My First $1 Million: Retired Tech Industry Director, 78, Delaware County, OhioEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
The Country Club Arms Race Adds Perks (And Fees) Beyond Golf. Is It Worth the Expense?As golf has grown in popularity, country clubs are upgrading with amenities for the whole family. Find out what's new and what's worth the cost of memberships.
-
Are You Jeopardizing Your Future to Help Your Adult Kids? An Expert Guide for How to Not Do ThatIf your adult child needs financial help, of course you want to provide it, but crafting a plan that also protects your financial and emotional well-being is vital.
-
The Anti-Prime Day Deals Guide to Everyday Essentials Worth Stocking Up on at Walmart, Target and Sam's ClubSkip Amazon and shop these anti-Prime Day deals at Walmart, Target or Sam's Club to save on all of your household essentials.
-
Amtrak Joins Prime Day With Deals on Fares — But You’ll Have to Act FastPrime members can score 20% off midweek fares — what travelers should know before booking.
-
Florida Revives Popular Home-Hardening Program With $280M in New FundingA major infusion of state funds revives Florida's flagship home-hardening grant program to protect homeowners and potentially lower insurance costs.
-
TSA Expands Precheck Benefits for Military, Gold Star Families and VeteransEnhanced "Serve with Honor, Travel with Ease" initiative lowers barriers to expedited screening for service members and their loved ones.
-
The Hated TSA Shoe Removal Rule Was Finally Phased OutAfter nearly 20 years, the TSA is ending its shoes-off policy. Travelers will still need a Real ID, and advanced screening remains in place. Here’s what to expect on your next flight.
