If your savings are sitting in a regular bank account, now might be a good time to see what else is available. After all, a small difference in interest rates can turn into hundreds of extra dollars over just a few months. Several low-risk savings options are still paying 4% or more, even though many traditional bank accounts continue to offer much lower returns.
The best rates available today
Right now, the standout choice is a 4-month certificate of deposit (CD) with a 5.00% APY, making it a solid pick if you don’t need to touch your money for a little while. Meanwhile, high-yield savings accounts remain competitive, with the best one offering 4.26% APY and more than 20 accounts nationwide still paying at least 4.00%.
One factor continues to make those higher rates especially valuable. Back in May, U.S. inflation reached 4.2%, which means cash sitting in low-paying accounts keeps losing purchasing power over time. Sure, earning 4% or more won’t completely erase inflation, but it can help narrow the gap and leave more of your money working for you.
Where else can your cash earn more
Beyond bank accounts, a few other low-risk choices are worth considering. U.S. Treasurys currently offer yields close to 5%, while new purchases of Series I savings bonds earn 4.26% during their first six months.
Brokerage cash management accounts and robo-advisor cash accounts are also available, although most currently pay less than 4%. Even so, they can be convenient if you prefer keeping cash close to your investment accounts.
Those rates can make a noticeable difference over time. For example, $10,000 earning 5.00% APY would generate about $247 in interest over six months. Increase that balance to $25,000, and the return climbs to roughly $617, while $50,000 would earn around $1,235 over the same period.
Keep in mind, though, that savings accounts and money market accounts have variable rates, so their yields could fall if the Federal Reserve cuts interest rates. CDs and Treasurys, on the other hand, lock in today’s rate for a fixed term, giving savers more predictable returns.
