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Key Takeaways
- Inflation has eased to 2.4%, but it will still eat away at any savings that are earning less than that rate.
- You can continue to earn well above today’s inflation rate with a top high-yield savings account, where rates range from 4.20% to 5%.
- To lock in your inflation protection, consider adding a top-paying CD, which guarantees its APY for months or years into the future.
Is Your Savings Rate Higher Than Inflation? Here’s How to Check
The latest Consumer Price Index (CPI) puts inflation at 2.4% over the last 12 months, which is a welcome dip from last month’s 2.7% reading. But it still sets a clear benchmark for your savings: If your cash in the bank is earning less than 2.4%, your money is falling behind rising prices.
That’s because inflation doesn’t just affect what you spend at the store. It also determines whether your savings in the bank are gaining ground or gradually losing purchasing power over time. When your interest rate trails the inflation rate, that gap works against you—even if your balance continues to build.
That’s where many savers run into trouble. The national average savings yield is just 0.39%, and the largest banks pay as little as 0.01%. With rates that low, even a moderate inflation reading can turn a positive balance into a real-world loss.
The difference compounds quickly. Earning 0.50% APY while inflation runs at 2.4% creates a 1.9% shortfall each year. Though the percentage loss is the same no matter your balance, the larger your savings, the bigger the dollar impact.
But there’s good news: You’re not stuck with such low returns, since dozens of accounts exist that can propel your savings above today’s inflation bar. You just have to know where to look.
Why This Matters
The inflation rate is the minimum your cash needs to earn to maintain purchasing power. If your savings APY falls short, moving to a higher-yield account can close the gap and keep your money growing in real terms.
The Easiest Way to Outpace Inflation Right Now
The most straightforward way to protect your savings is to earn an APY that exceeds today’s inflation rate. High-yield savings accounts make that possible—without locking up your money.
These mostly online banks and credit unions pay significantly more than traditional institutions while still giving you full access to your cash. And the gap isn’t small.
Right now, the 10 best high-yield savings accounts offer 4.15% APY or better—with some reaching as high as 5.00%. That’s comfortably higher than today’s 2.7% inflation rate, meaning your savings can truly grow.
As the chart below shows, top-tier savings yields have remained above inflation for more than two and a half years—a nice opportunity for savers willing to move their cash.
It’s Not Too Late to Move Your Money
Though the Federal Reserve may cut interest rates this year—which would push savings yields lower—it’s still worth moving to a top-paying account now. Even if cuts occur, the decline in yields would most likely be gradual, and today’s high-yield rates could stay above inflation for some time.
To capture inflation-beating returns, you may need to look beyond your primary bank. Online banks and credit unions often lead the market, and our daily ranking of the best high-yield savings accounts makes it easy to compare today’s top rates. If you’re holding significant cash at a traditional bank, moving it to a high-yield account could be one of the simplest ways to improve your returns.
Important
Deposits at any FDIC-insured bank or NCUA-insured credit union are backed by the federal government if the institution fails. Coverage is identical—up to $250,000 per person, per institution—regardless of where you keep your money.
Before Rates Fall, Consider Locking In a CD
A certificate of deposit (CD) can help you preserve today’s elevated returns—even if savings rates begin to drift lower. Unlike a savings account, a CD guarantees the APY you lock in for a set term, whether that’s a few months or several years.
That rate lock can be especially valuable in an uncertain rate environment. While markets expect the Federal Reserve to lower rates sometime this year, the timing and pace remain unclear. If cuts arrive, savings yields will likely move down as well—but any CD you already hold will continue paying its full rate until maturity.
In other words, a CD can extend your inflation protection well into the future, no matter what happens in the broader rate environment.
CDs are easy to hold anywhere
Because CDs require no ongoing management until maturity, they’re easy to open at a bank or credit union where you don’t already have accounts. That flexibility lets you shop nationally for one of today’s best CD rates without moving your everyday banking.
Right now, the top nationwide CD pays 4.50% on a 7-month term, and more than a dozen additional offers pay 4.15% or better on terms up to 24 months. If you’re comfortable locking in longer, you can even secure a guaranteed 4.00% to 4.05% return for 3 to 5 years.
