A big financial mistake to avoid in today’s economy

In today’s inflationary environment, consumers seem to be losing money left and right. They’re paying more for everything from groceries to gas, racking up higher credit card interest and seeing their investment returns dwindle. And the central bank expects Another fare hike As of September, this is unlikely to change in the near future.

The good news is that there’s one simple thing you can do to really benefit from today’s high rates.

The bad news is that many Americans don’t.

Check out today’s best savings rate here to see how much you could earn.

A big financial mistake to avoid in today’s economy

One group that benefits when interest rates are high is savers. Interest rates on deposit accounts are based on the federal funds rate, so higher rates equal higher earnings. That’s welcome news at a time when your dollars are dwindling elsewhere.

That means you need to put your savings in the right type of account to take full advantage of higher rates. Some accounts offer a paltry interest rate that doesn’t move the needle on your balance. Others pay 10 times as much (or more).

By switching to one of these accounts, you can easily do so Grow your savings fast. Still, one step The latest Santander surveyNearly 70% of middle-income Americans are not moving their savings into high-yield accounts.

If you’re among them, you basically are Losing free money. Fortunately, this mistake is easy to fix.

Best high yield accounts to open today

If your savings are sitting in a low-yielding account, it’s time to switch. Put your money into one of the following accounts today to start reaping the benefits of higher interest rates.

High yielding savings account

High yielding savings accounts Works like regular savings accounts. They are protected Federal Deposit Insurance, so your money is safe up to $250,000 per company. You can deposit your money through various methods including check deposit, mobile deposit and transfer from another account.

Access your money as needed without penalty (as long as you adhere to monthly withdrawal limits). This makes it convenient to keep your accounts Emergency fund.

The biggest difference is that high-yield savings accounts offer significantly more APYs. As of August 28, 2023, the national rate for regular savings accounts is 0.43%. FDIC. Today’s High Yield AccountsIn comparison, it offers fees of 5% or more.

„Using a high-yield savings account for your emergency fund is a no-brainer,” says Ryan McCarty, CFP and lead advisor at Castle Rock Investment Company. „For a rainy day or in case something goes wrong, you want to keep money in an account that can leverage your money. It’s super easy, and you can open and fund a new account within 24. Time to work at the right bank!”

Savings account rates are variable, meaning they change with overall interest rates. So, if rates are high – as they are now – you can earn even more.

Compare the highest yielding savings accounts online now.

Certificate of Deposit (CD)

Another high income account to consider is A Certificate of Deposit (CD). CD rates often beat high-yield savings account rates, and these rates are locked in when you open the account. So even though overall interest rates are falling, you can still enjoy today’s higher rates if you open a CD now.

However, there is one thing to consider when considering a CD. CDs come differently Norm, usually from a few months to several years. When you deposit money into a CD, you agree to keep it in the account for the entire term. If you need to access it before the period ends, you may face Early withdrawal penalty It can wipe out your savings. For this reason, CDs are better for specific savings goals than a rainy day fund you need to dip into anytime.

„CDs are often great for portions of your cash reserves that you know you won’t need for the duration of the CD,” says Joe Marks, CFP, wealth advisor and co-CEO of Bolin Creek Wealth Advisors. For example, you can open a CD to save money for a down payment on a house or an upcoming wedding.

You can also avoid early withdrawal penalties by opening a Short-lived CDA Penalty free CD or a creation CD ladder.

View current CD offerings here.

bottom line

“When deciding which [account] (CD or savings) is best for your situation, and it comes down to the length of time you can hold it before you need the funds,” says Faron Daugs, CFP, founder and CEO of Harrison Wallace Financial Group.

There is no reason why you cannot open both types of accounts.

„Investing in both CDs and high-rate savings accounts allows you to maximize your savings while keeping some assets liquid,” Chris Moore, Alliant Credit Union’s director of deposit and payment strategy, previously said. CBS News. „This can be useful in turbulent financial times.”

Whichever route you go, opening a high-yield savings account or CD is a fast, simple process that can start paying you right away. When the financial news is so bad, you owe it to yourself to take advantage of any bright side you can.