The Savings Solution

In an effort to curb inflation, the Federal Reserve has raised interest rates to their highest level in almost 20 years. For consumers looking to maximize their savings accounts during this time, experts suggest exploring options beyond traditional brick-and-mortar banks.

According to Bankrate, the average annual percentage yield (APY) for basic savings accounts is just 0.24%. However, online banks are offering higher yields to attract new customers. These online banks are regulated and insured by the FDIC, so customers can trust that their money is safe.

CIT Bank is currently offering the highest-yield savings account on the market, with an APY of 4.75%. Additionally, Apple and Goldman Sachs’ consumer division, Marcus, have teamed up to offer a savings account with an APY of 4.15%, which can be set up through the Wallet app on an iPhone.

For those looking to lock in a guaranteed return, certificate of deposit (CD) products offer even higher interest rates in exchange for holding money in an account for a fixed period of time. Bread, another online bank, is currently offering a two-year CD with a 5.10% rate.

It’s important to note that APYs can change in response to rising or falling interest rates. However, Bankrate’s senior vice president and chief financial analyst, Greg McBride, advises that consumers should still consider parking their money in high-yield savings accounts to build an emergency fund.

McBride notes that high APY products are within reach of everyone and recommends exploring online banks to find the best rates. While these banks may not be as familiar as larger institutions, they offer competitive rates and can help consumers get more out of their savings accounts.