There’s good news for folks who want to park their money in cash amid market volatility: The best savings rates are now up to 5.00%. That’s more than twice what they were just a year ago. And those rates may keep ticking upward: after a CPI report indicating inflation rose 4.9% in April 2023 compared to a year earlier, the Fed raised the federal funds rate, the central bank’s short-term rate, a 25 basis points, up from 5.00% to 5.25%, the highest since August 2007.
Bank rates lag when it comes to the dynamics of the central bank, but those 5.00% savings rates should trend higher over time as a result. That’s at least some tonic for those whose portfolios are in the gutter and whose passive cash holdings are losing precious value in light of inflation. If your savings account is delivering chump rates by comparison to those higher rates, it might be high time to search for a more high-yield savings account to grow your hard-earned cash.
For more help on which savings account might be suit your overall financial plan, think about working with a financial advisor.
Why are rates so good? The Federal Reserve’s decision to raise interest rates multiple times. As of May 2023, the Federal Reserve Interest Rate is set at between 5.00% and 5.25%. More interest rate hikes could come if high levels of job creation and increased inflation continue.
While higher interest rates can certainly cause some headaches for consumers — you’ll be paying more for your mortgage if you’re looking to pay for a house, for example — there are also definite upsides, such as being able to get more interest when you put your money into a savings vehicle.
High-yield savings accounts are often available online, and you can earn much higher interest than is traditionally associated with savings accounts. Among the current highlights:
- UFB Direct with an APY of 5.02%
- First Foundation Bank with an APY of 4.85%
- Valley Direct with an APY of 4.50%
- TAB Bank with an APY of 4.40%
- Bread Financial with an APY of 4.25%
- TIAA Bank with an APY of 4.25%
- Synchrony with an APY of 4.15%
SmartAsset’s best savings account guide is a good place to look if you want to find the savings account that will work best for you. Also, don’t sleep on using a certificate of deposit instead of a savings account for some of your money. CDs offer higher interest rates in exchange for a guarantee that you’ll keep your money in the bank for a set period of time. If you can afford to park some of your money for a period of several years, you can earn yourself a pretty solid return. SmartAsset’s guide to CD rates will let you know where to look.
For more help with savings or any other financial considerations, think about working with a financial advisor.
Tips for Saving More With a Savings Account
- When you have a savings account, you can be content to make one deposit and never touch the account again. But there are other methods to build up your savings. To boost your savings even further, you may want to set up automatic recurring transfers from another account to your savings account. Use a savings calculator to see how this can impact growth of your money over time.
- Don’t let fees and other booby-traps bog you down. You’ll want to be on the look-out for fees and requirements that can come with a savings account. Some banks do charge a monthly fee to have a savings account. You may be able to waive this fee by meeting a certain account balance. However, if these minimums and fees are not feasible for you to meet, you can easily find another savings account elsewhere.
- Shop around! Make sure, especially in this environment you find the absolute best savings account for you.
- A financial advisor can help navigate how much money to keep in cash and how a high-yield savings account can help you with your overall financial strategy. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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