There’s a very good chance that interest rates will drop this year. In fact, 100% of interest rate traders expect the Federal Reserve to lower rates in September, according to CME Group’s FedWatch tool.
If interest rates drop, banks and credit unions will lower rates on their accounts, too. You may have seen advice on how to prepare for this, such as putting your savings in the highest-paying certificates of deposit (CDs) to lock in a rate now.
You certainly could do that if you know you won’t need the money anytime soon (most CDs have early withdrawal penalties). Personally, I’m keeping my money where it is in a high-yield savings account. And I’m not worried about rates dropping for one simple reason.
It’s savings, not an investment
Like many people, I have savings and investments. Growth is my goal with investments, which is why I invest heavily in the stock market through a brokerage account. Historically, its long-term returns have averaged out to about 10% per year. For just about anyone, it’s wise to invest to build wealth for the future.
Our Picks for the Best High-Yield Savings Accounts of 2024
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American Express® High Yield Savings APY 4.25%
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APY 4.25%
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Min. to earn $1 |
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UFB Portfolio Savings Account 
APY 5.15%
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APY 5.15%
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Min. to earn $0 |
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CIT Platinum Savings 
APY 5.00% APY for balances of $5,000 or more
Min. to earn $100 to open account, $5,000 for max APY
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APY 5.00% APY for balances of $5,000 or more
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Min. to earn $100 to open account, $5,000 for max APY |
With savings, it’s a different story. I have an emergency fund for financial security, and I also save to pay for future expenses, including vacations and big-ticket purchases.
Growth isn’t my goal with my savings. I like earning a competitive rate on it, which is why I keep it in a high-yield savings account. But I don’t need to get the highest possible return. I have investments for that.
There are plenty of ways I could squeeze out more earnings from my savings. I could switch savings accounts to earn an extra 0.5%. Or I could open CDs so I’m protected when rates drop. But for me, there’s value in keeping it simple. I don’t want to constantly chase the highest APY or keep track of CD maturity dates. I just want my savings to be safe and earn a reasonable amount of interest.
How to manage your savings
Figuring out what to do with your savings doesn’t need to be complicated. First, look for an account with the following features:
- A competitive APY (anything over 4% is good right now)
- FDIC insurance (or NCUA insurance if the account is with a credit union)
- No monthly fees
For accounts that check all those boxes, go to The Ascent’s list of the best high-yield savings accounts.
Once you have an account, you can deposit your savings there. Now, the rate could go up and down from time to time, depending on what happens with interest rates as a whole. As long as you have a high-yield account, you can be confident that you’re earning a good rate.
If you have savings that you won’t need anytime soon, you may decide to open a CD for that. CDs can be useful when they work with your money goals. But there’s also nothing wrong with just keeping your savings in a savings account. It’s simple, it’s easy, and it leaves you with more time to focus on other things.
These savings accounts are FDIC insured and could earn you more than 10x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you more than 10x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
