The Smartest Places to Keep Your Cash If Rates Drop in 2025

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The September Federal Reserve meeting is right around the corner. On September 16-17, members of the Federal Open Market Committee will determine if the dwindling job reports will be enough incentive to cut rates for the first time this year.

The CME FedWatch is 92% certain that a rate cut of 25 basis points will happen this month. When the Fed does cut rates, it will impact savers. If you have money in a high-yield savings account, you'll likely see a slight reduction in APY, as this can occur days to months after the Fed's announcement, depending on your financial institution.

However, savings rates have far exceeded 4% for a long time now. And even with a slight reduction, they'll have you outpacing inflation in the meantime. With this in mind, here's where I'm parking my money.

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Set a base with an emergency fund

I'll be honest, I like to have flexibility in accessing my cash. It's why I use high-yield savings accounts to build emergency savings. What I like about them is that they're very easy to set up, they come with FDIC insurance up to $250,000 and you'll earn a healthy rate of return for risk-free options.

Circling back to the cash access, a high-yield savings account also allows me to pivot when I want to invest in something else. If inflation continues to creep up (grocery and energy prices are obscene right now), it gives me a chance to capitalize on riskier ventures that also offer a potentially better return.

With this in mind, if you're a saver who doesn't mind tucking money away, but you also want access to it quickly, use this Bankrate tool to find the best options fast:

My tip: Once you’ve built your emergency fund, consider separating it from other savings so you’re not tempted to dip into it. This way, your safety net stays intact, but your surplus dollars continue earning more while staying relatively liquid.

Lock-in a higher rate now

A certificate of deposit is a smart approach for established savers who don't mind tucking their money away and forgetting about it for months to years. I've used CDs in the past for short-term savings goals, and they do a great job of keeping you on course to meeting them.

The reason? They come with penalties if you withdraw before the term expires. And I don't like losing money.

Right now, my family has a few short-term savings goals, such as home renovations we want to do before putting it on the market. For this reason, I'll take a portion of my savings and devote it to a CD.

Compare some of today's best CD rates with the tool below, powered by Bankrate:

My tip: As I mentioned before, I like having access to my cash. So, there's a cheat code with CDs you can do to achieve both the benefit of locking in a higher rate now, with cash access should you need it moving forward.

A no-penalty CD is the Goldilocks of savings options. You can sign up for one now to lock in a great rate before the Fed lowers them. And after an initial funding term of one week to a month, you can withdraw your money either all at once or make occasional withdrawals once per month without any fees.

Here's where I wouldn't park my money right now

A man holds his hands up as if to say, "Please stop."

There are other savings options I won't touch for several reasons. One of which is a savings account from a traditional brick-and-mortar bank. Don't get me wrong, it felt like Cheers every time I went into my local branch. However, they don't offer rates anywhere close to what you receive with online banks.

I would also caution against using money market accounts. They work best for established savers who feel comfortable maintaining average daily balances above $1,000. If you're trying to build your savings or don't feel confident you can hit that target regularly, you'll likely pay monthly fees, which can offset any interest earned.

The other thing about MMAs is that they come with transaction restrictions. If you plan to write checks on the account or use debit cards, know that many banks will limit it to six transactions per month. Any transactions exceeding this limit could cost you, again negating some of the interest earned.

Ultimately, the market will soon change for savers. And even with the reduced rates, a high-yield savings account will help you earn more than inflation takes, with quick access to your money.

Further, if you have some short-term savings goals and can part with some cash, consider a CD right now. Locking them in before September 17 ensures you receive the highest rate.

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.