The Federal Reserve has been on a rate cutting spree, cutting rates at each of its last three meetings. However, it's unlikely the Fed will cut rates at its meeting this week.
As such, it gives savers some breathing room to make smart moves while rates remain high. Even with the dips in APYs thanks to the rate cuts, you can still earn a healthy rate that outpaces inflation.
With this in mind, here are smart savings moves to consider, amid lower APYs and higher inflation.
Inflation projections for 2026
December's inflation held at 2.7%. This surprised some economists who had forecast a higher inflation surge. Instead, it seems the opposite might apply in the interim.
David Payne of the Kiplinger Letter noted that the 12-month inflation rate might dip slightly from January through March. This has more to do with the dramatic price increases through the first quarter of last year than it does with inflation slowing, according to Payne.
Will that trend continue throughout 2026? J.P. Morgan thinks so, projecting that inflation will dip to 2.4% by the fourth quarter of 2026, provided there's strong wage growth.
Savings strategies to keep ahead of inflation
There are several ways to maximize your savings with sticky inflation. The first is to lock in a long-term CD. CDs are market-resistant as they offer fixed interest rates.
It means if you choose a five-year CD and the Fed cuts interest rates in the future, the rate you have won't change until after your CD matures.
And some five-year CD rates are around 4%. Use the Bankrate tool below to find and compare CD options fast:
There's another benefit to a long-term CD. Mark Hamrick, a senior economic analyst with Bankrate, notes, "If opting for a multi-year rate is a sound option for you, one can avoid the situation where maturing short-term assets will need to be reinvested, possibly at lower rates down the road."
And he's right. A five-year CD allows you to earn a guaranteed rate of return with no work on your part. Moreover, if the Fed cuts rates again this year, as many economists project, now's the time to lock one in while rates are outpacing inflation.
The one thing to note about long-term CDs is that you can't touch that money. If you withdraw it before the maturity date, you're likely paying at least a year of earned interest, lowering your returns.
Short-term alternatives that offer flexibility
Long-term CDs should keep you ahead of the game, at least for the rest of 2026. However, they're also best for conservative savers or those nearing retirement, who want a risk-free way to grow their money without access to it.
That said, what if inflation exceeds expectations and you want the flexibility to pivot to more traditional investment strategies, such as mutual funds or a diversified stock portfolio, which offer higher returns and risk?
If this applies to you, then consider a no-penalty CD. No-penalty CD rates average over 4% and have a shorter maturity window, between six and 14 months.
The benefit of these is that you can still lock in a rate while they're higher, but you also have the flexibility to pivot to other investments fast. That way, if the Fed cuts rates and prices continue to rise, you can find different solutions that maximize returns since this scenario will squeeze savers anyway.
The main consideration with no-penalty CDs is that once you fund them, you cannot access the money for at least a week, although some banks extend that to the first 30 days. Some also restrict withdrawals to once per month, while other banks allow you to take it all after the initial holding period.
However, if you're looking for a quick way to pivot, this could be a smart option as you won't feel the immediate impact of rate cuts. Regardless of which strategy you use, CDs can shelter your money from the rising costs of everyday items.
And with the Fed holding rates steady, now is the best time to take advantage of the higher rates while they're here.
