How much could savings rates fall after a Fed cut?

The full article continues below these offers from our partners.

What a cut today means for your savings

The Federal Reserve cut interest rates by a quarter point this afternoon. This is the second reduction in two months. This is important if you have cash in the bank, as the Federal Reserve’s benchmark rate directly affects what banks and credit unions pay on your savings.

Savings and certificate of deposit yields are expected to fall by about a quarter point on average in the coming weeks. For savers, this is a gentle slide rather than a sudden drop. Even after the adjustments, many high-yield accounts will still pay rates higher than 3%, with many remaining above 4%. This means that it is still worth moving your money if it yields a much lower return.

Although it is certain that the Fed will not cut interest rates until it is announced, financial markets currently expect that the Fed will cut rates by another quarter point in mid-December. If that happens, it could push savings and certificate of deposit rates to nearly half a percentage point below their current annual average by the end of 2025.

How to make sure your savings are in a good, high-yield account

No matter where you are in your savings journey, it pays to check that your money is generating a truly competitive return. Interest rates will always rise and fall as the economy shifts, but your savings shouldn’t stop when interest rates fall. Keeping your money in a good, high-yield savings account helps ensure it continues to grow in any environment.

Currently, major accounts still pay around 5.00% APY, although some require additional conditions to be met. More than a dozen others in the best high-yield savings accounts pay 4.25% or better, many without restrictions.

Even if interest rates fall, those returns will still be strong by historical standards. Smart benchmark: Aim to earn at least 3% — the current inflation rate — so that the value of your money continues to rise rather than lose ground.

Compared to 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. Every day you deposit your money into a low-paying account is a day you’re not working as hard as you can.

CDs offer strong, guaranteed returns with low prices

If you have savings that you won’t need to touch for a while, a CD offers something now rare for savers who value stability: certainty. CDs allow you to set aside a lump sum and lock in a guaranteed APY for a specified period – typically between 3 months and 5 years.

This predictability may be especially valuable as interest rates decline. Savings and money market accounts can adjust their rates at any time, but a CD continues to pay the same yield until it matures. By putting some of your extra money into one of today’s best nationwide CDs, you can secure a strong rate and consistent profits, no matter how the Fed behaves.

How to Find the Best Savings and CD Rates

Every working day, Investopedia It tracks rate data for more than 200 banks and credit unions that offer CDs and savings accounts to customers across the country and determines daily rankings of the highest-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the minimum initial account deposit must not exceed $25,000. It is also not possible to determine A maximum The deposit amount is less than $5,000.

Banks must be available in at least 40 states to be eligible to be available nationwide. While some credit unions require you to donate to a specific charity or association to become a member if you do not meet other eligibility criteria (for example, if you do not live in a certain area or work a certain type of job), we exclude credit unions with donation requirements of $40 or more. To learn more about how to choose the best rates, read our full methodology.