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According to the latest report released Wednesday by the Bureau of Labor Statistics, inflation continued to decline in August. At 2.5%, the rate is just half a percentage point above the Federal Reserve’s 2% target. The cut essentially guarantees that the Fed will cut its rate. federal funds rate The Fed is expected to cut its benchmark rate by 25 basis points at its next meeting, in November and December. Currently, the rate is stuck between 5.25% and 5.50%, and many expect the Fed to cut it by 25 basis points to start, and perhaps make additional cuts at its next meeting, in November and December.
While these cuts will undoubtedly be welcomed by borrowers who have faced higher rates on everything from credit cards to mortgages, they will be less beneficial for savers. While lenders don’t directly track what they offer on savings accounts, a lower federal funds rate will also lower yields on interest-earning instruments. And that’s not going to happen for long.
Understanding this, savers should therefore take proactive steps to take advantage of it while they still can. Below, we detail three specific savings accounts they should consider opening now.
Start by seeing how much more you could earn with a premium CD here.
3 Savings Accounts to Open While Inflation Slows
Here are three savings accounts to consider opening now, either individually or in combination with each other:
Certificate of Deposit (CD) Account
CD Rates are still high right now. Depending on the term you choose, you can potentially lock in a rate between 4% and 5% right now. And because of the way CD rates are structured, they will stay locked in and the same until the CD is ready. matured – regardless of the rate cuts that will be applied during this period. That said, savers will lose access to their funds for the entire duration of the agreement. CD term and may have to pay a large sum early withdrawal penalty to regain access. And those rates will start to come down as the rate cuts are issued and perhaps even before. So the window of opportunity to get a competitive CD rate is getting smaller by the day.
Find out online today what CD rate you can get.
High Yield Savings Account
High Yield Savings Accounts The rates may not be as high as CDs, but they’re close, and savers won’t have to give up access to their money to get that rate. That’s because high yield savings accounts work in the same way as traditional savings accounts, but with a rate much higher than the average of 0.46% that the latter currently apply. rates on high yield savings accounts are variable and subject to change as rates change, so you’ll need to be aggressive to start earning a high rate (and consider a online banking to obtain the highest possible rate).
Start opening a high-yield savings account online here.
Money Market Account
Money Market Accounts Savings accounts are a type of hybrid between savings and checking accounts. You may be able to get a higher rate with one of these accounts than you would with a traditional savings or checking account, but to get it, you may need to make a minimum deposit. Depending on how much you deposit (and how much money you keep in the account), you may be able to get a higher interest rate than you would with a smaller amount. But rates on these accounts aren’t immune to the overall economic climate, so start looking into money market accounts now if you think they’re the best option for your money.
The essentials
With inflation well below 2022 levels and the first federal funds rate cut since 2020 set to come later this month, savers should be prepared to make strategic decisions now. Whether to open a CD, a high-yield savings account, or a money market account will depend on your unique financial situation and long-term goals. Don’t sit idly by. These rates won’t be around much longer, so take advantage of the opportunity while you still can.
