The magic number your savings should hit now

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Are your savings ongoing?

At 2.9%, inflation may have come down from its 2022 highs, but it’s still the magic number your savings need to beat to stay ahead. If your account is only earning 1% while prices are rising 2.9%, you are effectively losing 1.9% of the value of your money each year.

That’s because inflation not only increases grocery and gas costs, it quietly erodes the amount of anything your money can buy. Most banks don’t help. 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%.

This widening gap between inflation and bank returns is leaving millions of savers behind every month. But you don’t have to accept that. Accounts that beat the inflation rate are easy to find, and moving your savings can stop the slow drip of lost value while simultaneously helping your balance grow.

How to stay ahead of inflation: Today’s best high-yield accounts

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

Even though the Fed cut interest rates in September, it’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 the benchmark of 2.9%.

As the chart below shows, high-yield savings accounts have outpaced the inflation rate for two and a half years — and that trend may continue in the coming months.

Even if you’re earning 2% APY — several times the national average — you’re still behind today’s magic number of 2.9%. By moving to a higher account that pays more, your money can grow instead of losing ground.

How to use CDs to stabilize the inflation rate

After you put money into a high-yield savings account, the next step is to leverage your earnings with a certificate of deposit (CD). CDs require you to put your money aside for a specific period — ranging from a few months to several years — but guarantee your APY for the duration.

This protection is important now. With the Fed already lowering interest rates and likely to lower them further this fall, locking in one of today’s highest CD yields can help you retain a return that beats inflation for longer.

It’s important to keep some liquid money in savings, but transferring part of your balance to a CD allows you to lock in today’s high returns before they vanish. The nation’s best CDs currently pay up to 4.45% for terms of less than a year, or 4.00%-4.25% for longer terms – both well above the inflation index.

How to Find the Best Savings and CD Rates

Each business day, Investopedia tracks rate data for more than 200 banks and credit unions that offer CDs and savings accounts to customers across the country and determines a daily ranking of the highest-grossing 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.