Why Skipping a Fed Rate Cut Could Be the Best Move for Your Savings

Fed holds rates steady—and your savings might thank you.

Higher for longer? How the Fed's patience puts cash back in your pocket.

While Wall Street whines for rate cuts, Main Street savers finally catch a break. No more earning pennies on your deposits—the yield curve just handed you a win.

Banks hate this one weird trick: earning actual interest. (Cue shocked gasps from bankers counting their 0.01% APY profits.)

Bottom line: In a world addicted to cheap money, sometimes the best stimulus is no stimulus at all.

Key Takeaways

• For the fifth time this year, the Federal Reserve held interest rates steady this week.
• Market expectations for a first rate cut in 2025 have shifted to late October, meaning rates could stay put for three more months.
• This could mean you’ll be able to earn today’s high rates for longer, as the Fed’s benchmark rate directly influences what banks and credit unions pay on your savings in the bank.
• Our daily rate research on the best high-yield savings accounts, money markets, and checking accounts makes it easy to earn up to 5.00%.
• It's also wise to stash some savings in a top-paying CD, where your rate will be locked for the full term, protecting you from future rate cuts.
  

The full article continues below these offers from our partners.

The Fed Could Hold Steady Until October, Letting You Earn 4-5% for Longer

The Federal Reserve's rate-setting committee met again this week, wrapping up its meeting on July 30. As widely expected, the Fed chose to hold interest rates steady. This marks the fifth consecutive meeting with no rate change, keeping interest rates firmly in neutral for the year.

The Fed’s next meeting is scheduled for Sept. 16-17, but traders are pricing in less than a 40% likelihood of a rate cut at that gathering, according to the CME Group's FedWatch Tool, which forecasts rate movements based on fed funds futures trading data. Market expectations for a rate cut at the Fed's subsequent meeting in late October currently stand at about 60%. This suggests it could be another three months before the Fed takes action.

This is important for cash savers because the interest rates you earn are directly linked to the federal funds rate. With the Fed’s benchmark rate still high, you can earn excellent returns—and those rates are likely to stick around until the Fed signals it's ready to make a move.

That means now is a great time to make sure your cash is earning one of today’s top rates in the 4% to 5% range. Our daily rankings make it easy to find the best options. You also have the chance to lock in those solid returns for months or even years, regardless of what the Fed does next. Below are strategies to help you make the most of these lucky times for savers—while they last.

Top Savings and Money Market Accounts Offer Up to 5%—With Flexible Access

When you have extra cash to stash but want to be able to withdraw it at any time, a savings account is a good fit. But not all savings options are created equal. The national average rate across FDIC banks is just 0.38%, and some of the biggest banks, like Chase and Wells Fargo, pay a near-zero 0.01%.

But you don’t have to settle for low rates, because there are high-yield savings accounts offering 10, 12, or even 13 times better returns. Right now, today's top savings accounts pay in the mid- to upper-4% range, with a few offering up to 5.00% APY. And finding a great option that fits your needs is easy with our daily ranking of the top-APY savings accounts.

Right now, you can also consider a money market account to earn a top nationwide rate. While money market accounts often pay less than the best high-yield savings accounts, the leader in our ranking of the best money market accounts is offering 5.00%—with fewer requirements than its 5.00% savings account counterparts.

Opening a New Account Is Easy

Starting a relationship with a new bank or credit union for one of these top accounts is easy. Transfers between your primary bank and your new account typically take just one to three days, and they can even be automated. Plus, keeping your savings at a separate institution can help reduce the temptation to spend on unplanned expenses.

This Unexpected Checking Account Also Offers 5%

While this article focuses on savings, sometimes a checking account offers such a great yield that you can essentially use it like a savings account. That's the case with mph.bank's "Free Account," which pays an impressive 5.00% annual percentage yield (APY) on balances up to $50,000.

To earn that rate, all you need is direct deposits totaling at least $2,000 per statement cycle (multiple deposits can count toward the threshold as long as they’re within the same month). If that's manageable, this account can serve either your checking or high-yield savings needs—or even both at once.

Why This Checking Account Is So Unusual

It's common for high-yield checking accounts to tie their high APY to a requirement for frequent debit card transactions. But mph.bank's account stands out by not requiring any debit card use at all. It also offers Zelle, making fast electronic transfers especially easy.

Before the Fed Lowers Rates, Consider Adding a CD to Your Savings Strategy

If you're able to set aside a portion of your savings for the future, consider one of today's best CDs, which are guaranteeing rates in the low to mid 4% range. Unlike savings or checking accounts, where the APY can be lowered at any time, the rate you lock in with a CD stays locked in until the CD's maturity date. That's especially useful whenever it's expected the Fed will soon be cutting rates.

Just be sure to consider your financial timeline and choose a CD term you’re confident you can stick to. That's because in exchange for a CD's locked-in rate, you’re committing to the full term. Cash out early, and you'll face an early withdrawal penalty that will reduce your CD's earnings.

Also, make sure you maintain a solid cash reserve somewhere more accessible, like a high-yield savings account. That way, if a financial need arises, you can tap those funds first and potentially avoid withdrawing from your CD.

Daily Rankings of the Best CDs and Savings Accounts

We update these rankings every business day to give you the best deposit rates available:

• Best 3-Month CD Rates
• Best 6-Month CD Rates
• Best 1-Year CD Rates
• Best 18-Month CD Rates
• Best 2-Year CD Rates
• Best 3-Year CD Rates
• Best 4-Year CD Rates
• Best 5-Year CD Rates
• Best High-Yield Savings Accounts
• Best Money Market Accounts

Important

Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that's below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.