Inflation is rising again — and it’s raising the magic number by which your savings must exceed

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Are your savings keeping up with today’s magic number?

Inflation rose again last month, with the CPI today rising to 3.0% annual rate– The highest since January. Even small moves like this matter, because inflation not only drives up grocery and gas costs, it quietly erodes the amount of anything your money can buy.

This makes the inflation rate somewhat lower The magic number-the minimum Return your savings that you need to earn to avoid losing ground. If your account is only gaining 1% while prices are rising 3%, you are effectively losing 2% of the purchasing power of your money each year.

Unfortunately, most banks will not help you bridge the gap. The national average savings rate is just 0.40%, while big names like Chase, Bank of America, and Wells Fargo pay close to zero at 0.01%.

But you don’t have to accept that. It’s easy to find accounts that have beaten the inflation rateAlso, moving your savings can stop the slow trickle of lost value while helping your balance grow.

How to stay ahead with a high-yield savings account

One of the easiest ways to beat inflation is through a high-yield savings account. You’ll earn much more than you would at a traditional bank and will still have full access to your money when you need it.

Although the Fed cut interest rates in September and it is Another cut is likely to be made next weekIt’s still a good time for savers. Today’s best high-yield savings accounts include 15 offers between 4.25% and 5.00%, putting you well ahead of your 3% target.

As the chart below shows, high-yield savings accounts have outpaced the inflation rate for more than two and a half years — and while this trend won’t last forever, it’s likely to continue for the time being.

Even a solid 2% APY can’t keep up with the current magic number of 3%, so larger accounts are the only way to stay ahead.

How to use CDs to stabilize the rate before the Fed cuts

After you put the money into a high-yield savings account, you can Level up your strategy With Certificate of Deposit (CD). CDs require you to keep your money parked for a specific period — anywhere from a few months to several years — but guarantee your APY for that entire period.

This protection is important now. With the Fed expected to cut interest rates twice this fall, opening a CD today — while keeping some liquid cash in savings — can help. Maintain a return that beats inflation for a longer period.

The best CDs nationwide pay up to 4.40% with shorter terms and around 4.00% to 4.25% with longer terms – both well above the inflation index.

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.