Let’s face it: It’s been a tough year financially for many Americans. Persistent inflation has caused prices on everything from transportation to groceries to skyrocket. And, the Federal Reserve hastried to tame inflation by increasing its benchmark rate 11 times since March 2022, but those rate increases have led to exponentially higher rates for borrowers on everything from credit cards to mortgage loans.
But while the economic landscape is tough for many people right now, there is one bright spot: savings rates. The Fed’s rate increases over the last 18 months have resulted in banks offering much higher rates on interest-bearing accounts like certificates of deposit (CDs) and high-yield savings accounts. In turn, savers now have a unique opportunity to earn big returns on the money in their savings accounts.
And, this fall is a great time to capitalize on what high-yield savings accounts, in particular, can offer.
Why you should open a high-yield savings account this fall
One of the main reasons to open a high-yield savings account this fall is that these accounts currently offer very attractive interest rates, with many online banks providing APYs of 4.5% or more. And, some banks are offering rates as high as 5%. This is a stark comparison to the meager 0.45% rate that the average saver currently receives with a standard savings account.
In fact, many high-yield savings account APYs currently rival the rates offered on CDs — and that’s especially true for longer-term CDs. And, unlike CDs, high-yield savings accounts offer easy access to your savings — and you won’t have to pay early withdrawal penalties if you need to access your money.
Plus, the Federal Reserve temporarily paused the upward trajectory of interest rates this week. For now, the benchmark rate will stay within a range of 5.25% to 5.50% — the highest it’s been in 22 years. And since high-yield savings account rates are influenced by the benchmark rate, now is an opportune time to open one. By doing so, you’ll start raking in a top interest rate on the money in your savings.
That said, rates on high-yield savings accounts are variable, meaning that they can increase or decrease depending on the overall rate environment. And, there are signs that savings ratesmay have peaked, so if you wait to open one, you could end up with a lower APY on your money if rates drop in the near future.
The better option is to make the most of this unique opportunity by opening a high-yield savings account today to start earning at a high rate of interest — before any rate changes occur.
Other high-yield savings account benefits to consider
In addition to the high-rate environment, there are a few other reasons you may want to open a high-yield savings account this fall, including:
The rates are currently beating inflation.By stashing your funds in an account that offers a competitive interest rate, you can ensure that your money grows faster than the rate of inflation, helping you maintain your buying power.It can help you meet your year-end savings goals. As the year approaches its end, you may be thinking about how to finance holiday expenses, travel plans or meet other financial goals before January 1. And, a high-yield savings account can help you stay on track with these goals — and rack up the interest for these year-end expenses.These accounts are low-risk. Unlike investments in the stock market, which can be volatile, high-yield savings accounts offer a safe and secure place to park your cash. Your deposits are typically insured up to a certain limit (up to $250,000 per depositor, per account ) offering you peace of mind.
The bottom line
This fall is a great time to make a move that will benefit your future by opening a high-yield savings account. Not only are these accounts offering rates that are much higher than they were earlier this year, but this type of account can also help you better save for year-end expenses or grow your wealth with little risk. But if you take this route, just make sure to compare all your options and watch for any hidden fees or costs tied to the account. There’s no point in paying for extra expenses when there are lots of high-yield savings accounts that come with few or no fees and high APYs on your money.