The Fed’s interest rate decision is days away — 3 smart steps to protect your savings now

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What this week’s Fed decision could mean for your money

The Fed is expected to make a second modest rate cut this week, after a quarter-point cut in September. Markets are anticipating a 98% chance of another quarter-point move on Wednesday — and a 91% chance of another cut in December.

This is important for savers because the interest rates that banks and credit unions pay on savings accounts and CDs are tied to what the Federal Reserve does with its benchmark interest rate. As a result, deposit yields are likely to decline in the coming months.

But even after several cuts, today’s interest rates remain attractive by historical standards, since the central bank pushed the interest rate to a 23-year high in 2023 and kept it at that level for 14 months. This sent savings and CD returns to record highs – some exceeding 6%. Even now, it’s still easy to achieve returns above 4%.

Although you can’t avoid lower returns in the future, you can take steps now — and build smart habits going forward — to make sure your money is still performing as well as possible, especially since banks are still offering some of the best returns they’ve seen in years.

As savings rates decline, these two simple habits can help maximize your earnings

The rates that banks pay on high-yield savings accounts closely track the movements of the Federal Reserve. With one or more cuts expected this year, most savings rates will drift downward. How quickly savings rates fall depends on the institution: some will lower your return in one step, while others will lower it gradually over time.

Unfortunately, you can’t stop your rate from falling. Savings accounts are variable interest rate products, and banks can adjust the APY at any time – without notice.

But there are smart habits that can help you maximize your profit, regardless of what happens with broader interest rates.

• Habit #1: Regularly check your savings account APY. The current rate will usually appear in your online banking or app, often under Account Details. It may also appear on your statement, or you can call or chat with your bank to confirm. Staying on top of your APY ensures you’re not months behind on a big drop.
• Habit #2: Shop the market if your price drops too low. If your bank reduces your APY significantly, switching banks could mean earning more elsewhere. Our daily ranking of the best high-yield savings accounts makes comparison easy. With wire transfers, moving money from your account to a new bank is generally easy.

These two habits can help you make the most of low savings rates, but to help ensure that hold onto At today’s great prices, you’ll need a different type of account.

Another strategy to level up your earnings: Get a high APY while you still can

When the APY is high and you want to secure it for the future, CDs are a good tool to use. The rate you sign up for is guaranteed for the entire duration of the CD, whether that’s 3 short months or 5 long years. No matter how far or quickly the Fed lowers the interest rate, the price of your CDs will not change.

With a Federal Reserve rate cut expected this week, time is short if you want to capture the highest returns today. Our ranking of the best CDs nationwide highlights 11 options that pay 4.30% to 4.40% with terms ranging from 3 to 12 months, while several others offer 4.25%. You can also explore our ratings for each term for more options, especially if you want a longer price guarantee.

Just choose your CD term carefully, as you will be subject to an early withdrawal penalty if you choose to cash out early. It’s also smart to keep a reserve in a high-yield savings account, since keeping a flexible cash cushion ensures you can cover unexpected expenses without breaking your CD.

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.