In September, the Federal Reserve cut interest rates for the first time in four years, signaling potential decreases in the high annual percentage yields (APYs) we’ve become accustomed to in savings accounts and certificates of deposit (CDs).
As interest rates fluctuate, consumers may wonder how to secure the best savings or CD rates. Monitoring financial institutions daily can provide confidence in locking in competitive rates, and now could be an opportune time to take advantage before APYs decline further.
Several banks and credit unions are offering appealing rates for both savings accounts and CDs, despite the recent interest rate cuts. Here’s a glimpse of some top offers:
- Alliant High-Rate Savings Account: Earn a $100 bonus when you deposit at least $100 a month for 12 consecutive months and maintain a balance of $1,200 by year-end. This offer is available until December 31, 2024.
- SoFi Checking and Savings: With direct deposits, customers can earn up to 4.50% APY on savings balances, alongside a bonus of up to $300, subject to eligibility and terms.
High-yield accounts, including savings, checking, money market, and cash management accounts, continue to offer strong APYs, particularly through online banks that tend to provide better rates than traditional brick-and-mortar institutions.
- High-Yield Savings Accounts: These accounts offer higher returns while maintaining the security of a traditional savings account, making them ideal for short-term financial goals.
- High-Yield Checking Accounts: While slightly lower than savings account rates, these accounts provide flexibility for everyday transactions and often come with debit cards and checks.
- Money Market Accounts: These accounts blend the features of both savings and checking, offering tiered interest rates and ease of access through debit cards or checks.
- Cash Management Accounts: Offered primarily by online banks, these accounts often allow unlimited transfers and access via debit cards.
CDs typically offer higher APYs compared to other accounts, especially for those willing to lock in their funds for a set period. The best CDs today offer rates up to 5.10% APY, much higher than the national average.
- No-Penalty CDs: These allow you to withdraw funds early without penalty, though they may offer slightly lower APYs.
- 6-Month CDs: Currently offering mid-5% APYs, these are a great option for short-term savers seeking elevated returns.
- 1-Year CDs: Offering some of the highest rates, these are popular for building a CD ladder or for those with a solid emergency fund.
- 2-Year, 3-Year, and 5-Year CDs: Longer-term CDs provide stability, with rates locked in for the full term, helping savers avoid declining APYs in a changing market.
While the Federal Reserve doesn’t directly set CD rates, its decisions influence how banks adjust their APYs. Following the Fed’s interest rate cuts, many experts predict further rate decreases, which means the APYs on CDs and savings accounts may continue to drop. Acting now to secure high rates could be beneficial, as the longer you wait, the lower the available APYs may become.
When choosing between savings and CD accounts, consider not only the APY but also other factors like the term length, early withdrawal penalties, minimum deposit requirements, and fees. It’s also important to verify that the bank or credit union is FDIC- or NCUA-insured for deposit protection.
Comparing rates across different financial institutions, particularly online banks, can help you secure the best return on your savings. For those hesitant about long-term commitment, a CD ladder strategy—where funds are spread across CDs with different maturity dates—can balance liquidity with higher interest earnings.
In today’s market, acting quickly to lock in favorable CD or savings rates could lead to better financial returns, especially as interest rates show signs of further decline.
With input from Business Insider, CNET, and Fortune.
