Interest Rates Are Climbing Again. Here's Where to Move Your Cash Now

Big news, savers: The Federal Reserve recently raised its benchmark rate for the first time since 2023, bringing it to a range of 3.75% to 4.00%. Another hike could come before the year’s out.

What does that mean for you? First, you probably don’t need to make any massive moves right now. But if you’ve got cash sitting in a savings account earning next to nothing, this is a good time to fix that.

Here’s why now’s a good time to open a high-yield savings account, and the other money moves to make (or not make) now.

Should you open a high-yield savings account right now?

Is your loose cash still in an old-school savings account earning next to nothing? If so, yes — a high-yield savings account (HYSA) should definitely be your next move.

The national average savings account rate is just 0.37% APY, according to Motley Fool Money research. The best high-yield accounts pay as much as 10X-12X that, with no real tradeoff. You’re not locking your money up, and you’re not taking on any risk, since HYSAs are FDIC-insured, just like your traditional bank account.

Even better, moving your emergency fund into an HYSA takes maybe 15 minutes. You keep instant access to the money, and it just quietly earns more while it sits there.

The only real downside is with an online-only bank, you won’t have access to any physical bank branches. But for most people, that’s not a big deal these days.

If all this sounds great to you — and it should! — our list of the best high-yield savings accounts is a great place to start looking.

What counts as a “good” savings APY?

Honestly, anything above that 0.37% national average counts is a win. But look for an account that gives you at least eight to 10 times that amount — you can easily earn 3.00% APY or higher on your cash right now.

How much does that come out to in real dollars? That depends how much you keep in your account. If you keep a balance of, say, $10,000, a 3.50% APY would net you about $350 a year in interest.

And on a balance of $20,000, you’d earn twice as much — about $700 a year.

Keep in mind that rates on these accounts are variable, so they can change at any time. Banks adjust their APYs as the Fed rate changes, which cuts both ways. You’ll benefit if rates climb further, but you’ll feel it if they fall.

Is now a good time to lock in a CD?

The short answer: Probably not.

A certificate of deposit (CD) locks in today’s APYs — and your cash — for a set period, which protects you if the Fed reverses course and starts cutting again. But if anything, rates are expected to rise again — so you wouldn’t want to lock in a lower rate now.

Also, if there’s any real chance you’ll need the money early, you’ll have to pay an early withdrawal penalty to get it. So a CD only makes sense for cash you can genuinely forget about for a while.

If you like the idea of a guaranteed rate, it might be worth comparing the best CD rates before committing. But honestly, I’d hold off for the time being.

Don’t change your investments over one rate change

Finally, a quarter-point hike isn’t a reason to buy or sell anything in your investment portfolio.

Interest rate changes ripple through the economy slowly, and reacting to a single Fed decision usually does more harm than good — you’re just adding cost and risk chasing something you can’t time.

Your short-term savings are the one place where a rate change is worth acting on immediately, since there’s no downside to moving to a better rate.

Keep your investment strategy on autopilot and let your savings do the adjusting instead. That’s the low-effort move that actually pays off here.