The Federal Reserve held rates steady at its April meeting, giving savers a bit more time to take advantage of elevated yields. While rate cuts are still expected later this year, this pause extends the window to lock in stronger returns on high-yield savings accounts before APYs begin to drift lower.
When the Fed cuts rates, it lowers the APYs on savings accounts. However, it can take weeks to months for banks to lower rates, and even with a minor reduction, high-yield savings accounts will still earn a rate surpassing inflation.
We also present another risk-free savings option that'll help you maximize returns.
Why it’s worth getting a high-yield savings account before the next Fed meeting
Opening a high-yield savings account is a smart way to reach your savings goals.
Why? Because the rates are still high. Our top choice, Newtek Bank, offers a 4.20% APY with no account minimums. Best of all, the account doesn't come laden with fees to impede savings growth.
Along with Newtek, you can compare rates on high-yield accounts by using the tool below, powered by Bankrate:
Before opening a high-yield account, keep in mind the following:
- High-yield savings accounts have variable interest rates, so if the Fed decides to cut rates again in the future, it can lower your APY
- Find a bank offering FDIC or NCUA insurance (for credit union members), as it'll protect your deposits up to $250,000 per person
- Keep your money in a separate savings account so it's more difficult to access, reducing impulse purchases and allowing your savings to grow
- Set up automatic payments from your checking account to your high-yield account, so it makes saving money easier
- Having cash access to a high-yield savings account can be a challenge, so make sure to have an emergency fund with an account you can regularly withdraw cash from if needed
When to consider a CD account
Unlike high-yield savings accounts, CD accounts offer a fixed APY. This means that if rates go down after you've opened a CD, your earnings won't be affected.
If you're concerned about earning a lower rate of return, then it's wise to consider this over a high-yield savings account. You can shop and find the best CD term for your needs, using this tool powered by Bankrate:
While opening a CD account can be a smart way to take advantage of high rates for as long as possible, there's one caveat: You'll need to make sure you don't make any withdrawals before the CD matures. Doing so will result in fees that can offset any interest earned (unless you have a no-penalty CD account).
Another thing to keep in mind is that many banks automatically renew CDs. Set a reminder on your phone a week before maturity, so you have time to explore more options.
Lock in higher returns while you can
Taking advantage of today’s high-yield savings and CD account rates can help you maximize your earnings. With rates holding steady for now, savers still have a window to earn above-average returns before potential cuts begin to push yields lower, making this a smart time to put idle cash to work.
