The Federal Reserve refrained from cutting rates at its meeting this week. After three consecutive rate cuts, the Fed is adopting a wait-and-see approach, based on strong GDP projections for 2026.
As such, savers have some breathing room to make moves to reach 2026 goals. One of the best ways to achieve short-term savings goals is with a high-yield savings account.
They're flexible savings solutions, as you can lock in rates as high as 4.35% APY with no fees. Here's a look at why now is a great time to use one, the best accounts to consider and potential earnings.
Is a high-yield savings account worth it after three rate cuts?
Yes, a high-yield savings account remains a smart choice. While rates have dipped on some accounts, others have remained unchanged so far.
This makes them smart options for short-term savings goals. If you're planning a vacation in a few months, for example, securing a higher rate now ensures you meet your goal more quickly, without tying your money up in stocks or CDs.
Furthermore, a high-yield savings account is a wise way to build and maintain an emergency fund. You can set automatic transfers to pull from your checking to your savings to achieve this.
Here are my top picks of savings accounts now:
Account |
APY |
Min. opening deposit |
|---|---|---|
4.35% |
$0 |
|
4.20% |
$500 |
|
4.02% |
$100 |
|
4.02% |
$500 |
|
4.00% |
$100 |
|
3.90% |
$0 |
|
3.75% |
$1,000 |
There are other considerations with a high-yield savings account. Chief among them is that they come with variable interest rates. If the Fed decides to cut rates again this year, your savings rates can drop, too.
Another consideration is cash access. Some high-yield savings accounts don't come with ATM cards, so unless you have a checking account with the same bank, it can take one to several business days to transfer funds from your savings to your checking. By that same token, though, it also can help you think twice before making impulse purchases.
If you're interested in opening an account, you can use this Bankrate tool to explore other options:
How much can you earn with a high-yield savings account?
It depends on how long you plan to hold the money in the account and how much you want to deposit. Using our top choice, Newtek Bank, here's how much you can earn in a year with its current 4.35% APR:
- $5,000: You'll earn $222.29
- $10,000: You'll gain $444.57
- $25,000: You'll earn $1,111.43
- $50,000: You'll gain $2,222.86
Is it the best option for your savings needs? If you need quick access to your cash for a short-term purchase or if your expenses are sometimes unexpected, then yes, a high-yield savings account will be the best fit for you.
However, if you have emergency savings fully funded and don't mind tying up your money for a short time, then the best CD rates offer you better protection from Fed policies because they come with fixed interest rates. Once you lock in a rate, you'll keep it throughout your term, even if the Fed decides to cut rates again.
Just remember that CDs require you tie up your money for the term you selected. So, if you don't want to restrict access to your cash, it's difficult to beat the flexibility a high-yield savings account offers.
Now is the time to capitalize on higher rates
The Fed didn't cut rates at its January meeting. This is great news for savers looking to reach short-term goals, as a high-yield savings account still offers excellent rates to help you achieve them.
