Expert: Now is the time to start a high-yield savings account

Soaring interest rates, rising inflation, and sky-high credit card debt….but finally, there is a silver lining to the state of the economy. After hitting near-record lows during the start of the pandemic interest rates have been rising exponentially. This is now one of the best times for earning interest in FDIC-insured savings accounts.

Matthew Goldberg from Bankrate says more than 16% of Americans aren’t accruing interest on savings, and that is a lost opportunity. “Now’s the time to make up for it in a way by being in a high-yield savings account at an FDIC-insured bank.”

Traditional savings accounts are currently earning as high as 5.25%, while Inflation is 3.67%. Compared to last year when savings accounts were at a meager 0.75% and inflation was a 9.1%.

Matthew Goldberg, Bankrate Analyst says the high yields are a perfect storm created by the Federal Reserve, “The combination of the Fed raising rates to fight inflation and inflation now coming down potentially because of those rate increases is why you’re seeing this trend happening now.”

That’s for purely liquid savings. If you want to look at CDs those are also doing well at 5.5%.

Matthew says that’s a good option for you if you don’t need to access those funds for a period.

“CDs are paying a competitive yield. However, if you thought the Fed has raised rates so many times that what goes up must come down. Maybe looking at those longer-term CDs could be a good option. Just make sure if you’re buying something in a year, don’t get an 18-month because CDs generally have early withdrawal penalties.”

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