Savings Rates Will Dip, But Not Dive. There’s Still Time To Get on Board for a Great Return.
Key Takeaways
- Even as the Federal Reserve begins cutting rates, yields on savings and CDs will drift lower gradually, not collapse overnight.
- A top high-yield savings account is always a smart move—it keeps your cash earning more, even when interest rates ease.
- If you have extra savings, consider locking in a CD now to secure one of today’s strong rates for months or even years.
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Rate Cuts Are Coming, But the Drop Will Be Gradual
The Federal Reserve will hold its next rate-setting meeting in less than two weeks, and financial markets overwhelmingly expect a rate cut then, followed by another in December. That matters if you have cash in the bank, since the Fed’s benchmark rate directly influences what banks and credit unions pay on your savings.
The next rate announcement is scheduled for Oct. 29, and traders are giving a 99% chance of a quarter-point reduction that day. Another decision will follow on Dec. 10, with markets pricing in a 94% probability of another quarter-point cut.
If those forecasts hold, deposit rates could ease by about half a percentage point by year-end. That’s not great news for savers, but it’s also no reason to panic.
Here’s what you need to know: rates are expected to dip gradually, not dive, and even after those cuts, savers will still be able to earn well above 3%—and possibly still 4%—by choosing a top high-yield account. So while the rate environment is shifting, it’s still a strong one for putting your cash to work.
Why This Matters for You
Rate cuts won’t erase high savings returns overnight. Act now to earn a top yield to grow your money faster than inflation.
A Top High-Yield Savings Account Always Makes Sense
Whether you’re just starting an emergency fund or already have a healthy cash cushion, it’s always smart to make sure your money is earning a competitive return. Rates will naturally rise and fall as the economy shifts, but that doesn’t mean your savings have to stop growing. By keeping your cash in a top high-yield savings account, you can be confident it’s earning as much as possible in any rate environment.
Right now, you can still earn up to 5.00% APY with the nation’s leading accounts, though the top rates require meeting a few conditions. Fortunately, more than a dozen other options in our daily ranking of the best high-yield savings accounts pay 4.25% or better, many with no strings attached.
True, rates will likely slip once the Fed begins cutting. But even then, choosing a top-ranking account means you’ll still be earning a strong return. For instance, the 10th-best APY in our ranking stands at 4.35%. Even if that dropped by half a point, you’d still earn 3.85%.
This year’s 4%–5% yields have been a treat, but upper-3% rates are still inflation-beaters, keeping your money growing faster than the latest 2.9% inflation rate. And compared to the national savings average of just 0.40%, a high-yield account continues to multiply your earnings many times over.
Remember, each day you wait is another day your money isn’t working as hard as it could.
Don’t Shy Away from Smaller Banks
The highest-paying savings accounts are often offered by smaller or online banks, but they’re just as safe as the big names. Every FDIC bank carries the same federal insurance on up to $250,000 per depositor. And because electronic transfers make moving money easy, keeping your savings at a separate bank is simple. It may even help you resist the temptation to spend it.
To Lock In Today’s Stellar Rates, Open a Top CD
If you’re lucky enough to have more in savings than you’ll need to access in the near term, you have the opportunity to upgrade your return by locking in one of today’s rates to enjoy for months or even years. Certificates of deposit (CDs) let you deposit a lump sum of savings and earn a guaranteed APY for a set term, generally ranging from 3 months to 5 years.
This differs from the rate you earn on a savings or money market account. Those are variable rates, which the bank or credit union can change at any time, and without notice.
A CD rate, on the other hand, is yours to keep until the certificate matures. And right now, it’s an especially smart time to lock in, since interest rates are widely expected to fall later this year—and possibly again next year. By putting some of your savings in one of today’s best nationwide CDs, you can enjoy a top current return for months or years down the road, no matter how many cuts the Fed makes.
Related Education
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
Important
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.