:max_bytes(150000):strip_icc()/howlow-yourstockbank-8fab15bf74944b29b663edeed355dc7a.jpg "How Low Could Savings Rates Go After the Fed’s Cut?")
:max_bytes(150000):strip_icc():format(jpeg)/howlow-yourstockbank-8fab15bf74944b29b663edeed355dc7a.jpg)
Key Takeaways
- The Federal Reserve announced a quarter-point interest rate cut today, and a similar reduction could follow in December. If that happens, that could result in rates falling by about a half point by year-end.
- As a result, yields on the best high-yield savings accounts will drift lower—but it will be gradual, not an overnight collapse.
- If you can set aside some of your savings for a while, consider locking in a top certificate of deposit (CD) now to secure one of today’s strong rates into the future.
The full article continues below these offers from our partners.
What Today’s Cut Means for Your Savings
The Federal Reserve (Fed) cut interest rates by a quarter point this afternoon. This is its second reduction in two months. 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.
Yields on savings and certificates of deposit (CDs) can be expected to drift about a quarter point lower on average in the weeks ahead. For savers, that’s a gentle slide rather than a sudden drop. Even after adjustments, many top high-yield accounts will still pay upper-3% rates, with many remaining above 4%. That means it’s still worth moving your money if it’s earning a much lower return.
Why This Matters to You
Even with the Fed cutting rates again, your savings can keep earning a strong return. Rates will gradually drift lower, not crash, giving you time to make sure your money’s in a high-yield account that pays a competitive rate.
How to Make Sure Your Savings Are in a Good High-Yield Account
No matter where you are in your savings journey, it’s worth checking that your money is earning a truly competitive return. Rates will always rise and fall as the economy shifts, but your savings shouldn’t stall when rates dip. Keeping your cash in a good high-yield savings account helps ensure it keeps growing in any environment.
Right now, top accounts still pay around 5.00% APY, though some require meeting extra conditions. More than a dozen others in the best high-yield savings accounts pay 4.25% or better, many with no strings attached.
Even if rates slip, those yields will remain strong by historical standards. A smart benchmark: aim to earn at least 3%—the current inflation rate—so your money’s value keeps climbing instead of losing ground.
Compared with the national savings average of just 0.40%, a high-yield account can multiply your earnings many times over. That’s why it pays to be proactive. Each day your cash sits in a lower-paying account is a day it’s not working as hard as it could.
Don’t Shy Away from Smaller Banks
Some of the highest-paying savings accounts come from smaller or online banks—and they’re just as safe as the big names. All FDIC-insured banks cover deposits up to $250,000 per depositor, per bank. And with today’s easy electronic transfers, keeping your savings at a separate bank is simple. It may even help you resist the temptation to spend it.
CDs Offer Strong, Guaranteed Returns as Rates Move Lower
If you have savings that you won’t need to touch for a while, a CD offers something rare right now for savers who value stability: certainty. CDs let you set aside a lump sum and lock in a guaranteed APY for a set term—typically between 3 months and 5 years.
That predictability can be especially valuable as interest rates move lower. Savings and money market accounts can adjust their rates anytime, but a CD keeps paying the same return until it matures. By putting some of your extra cash into one of today’s best nationwide CDs, you can secure a strong rate and steady earnings, no matter how the Fed acts.
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.
