3 savings accounts that are outpacing inflation to consider now
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Inflation looks to be moving back in the right direction.
That was one of the major takeaways on Wednesday after the Bureau of Labor Statistics released its latest reading, this time for July. At 3.4% now, the rate is both lower than it was in June and even lower than it was in May when it sat over 4%. Core inflation, which accounts for energy and food prices, also declined slightly in July from 2.6% to 2.5%. That said, after years of elevated inflation, millions of Americans still find themselves in need of extra financial protection and support. And with the rate here still comfortably above the Federal Reserve’s target 2% goal and concerning new unemployment figures, now could be a smart time to revisit where you keep your savings.
Fortunately, there are multiple, potentially lucrative account options still available. By opening one or more of these accounts you’ll protect your principal in a way you wouldn’t by investing in today’s unpredictable market. But you’ll also grow your interest with a rate that comfortably outpaces today’s cooling inflation one. And with three primary ones to evaluate, there’s likely an account that can meet your financial needs while allowing you to take advantage of today’s elevated rate climate while you still can. Below, we’ll examine three specific ones worth knowing.
Start earning more interest on your money by opening a high-yield savings account here.
3 savings accounts that are outpacing inflation to consider now
With an interest rate of just 0.38% tied to a traditional savings account now, keeping any money there doesn’t just mean that you’re failing to keep pace with inflation, it actually means you’re losing money by not making the shift into one or more of these three account types now:
A high-yield savings account
Interest rates on this specific savings account type sit above 4% now, or more than half a percentage point above today’s lower inflation rate. But the account operates just like traditional savings accounts do with the rate differential being the prime difference. So you’ll be able to continue banking, making withdrawals and deposits as you’re already accustomed to, all while earning more on your money and staying one step ahead of inflation. And, if you take the time to diligently shop around, you may even be able to find a high-yield savings account with a rate that’s considerably higher than that 4% baseline now.
Start shopping for high-yield savings accounts online today.
A money market account
Money market accounts have the lowest interest rates of the three primary savings accounts to consider now. That said, at around 3.90% now, they’re still higher than the inflation rate. And with a variable rate well positioned to increase should the Fed raise rates later this year and check-writing features that other savings accounts don’t offer, this could be a lucrative account worth considering for those savers looking to streamline their banking needs with a single account while outpacing today’s inflation rate.
A certificate of deposit (CD) account
With some terms offering rates as high as 4.25% or 4.40%, a CD account offers the easiest and most profitable way to stay ahead of inflation now. Rates are fixed, meaning that they won’t change even if the rate climate does and, because of that, you’ll be able to budget with certainty by knowing exactly what you stand to earn once the account hits its maturity date.
That said, it’s important that you only deposit an amount that you can afford to keep frozen in the account until the maturity date arrives as an early withdrawal fee could negate all of the interest you’ve earned to that point. But if the primary goal is to outpace today’s inflation rate as much as possible, you’d be hard pressed to find a better savings vehicle to accomplish that.
The bottom line
High-yield savings, money market and CD accounts all currently outpace inflation and are positioned to do so in the months ahead. That said, if inflation does continue its decline, rates could be cut and returns here could diminish, especially over an extended period of time. It makes sense, then, to get started with one or more of these accounts quickly, allowing you to weather today’s market volatility while earning as much interest as you can while rates and returns are still high and plentiful. And with online marketplaces listing accounts, rates, terms and banks all in one easy-to-use location, it’s simple to get started right now.
