This Must-Do Money Move Looks Even Better Today Than It Did Yesterday
Have you heard that interest rates are really high these days?
Those sky-high rates are making it harder to pay off credit card debt, making new and used cars way more expensive and turning a mortgage into little more than a pipe dream for a lot of people.
It sucks, right?
Unfortunately, however, it probably will not change anytime soon.
That's because those rates are tied either directly or indirectly to decisions made by the Federal Reserve -- the central bank of the U.S. -- and the Fed decided earlier today that they're OK with rates staying the way they are for the time being. (Here's a deeper dive into why they think that.)
The silver lining
While that's surely bad news for people who have credit card debt or are shopping for cars and mortgages, there is some good news here.
Really? Can high interest rates ever be good?
Absolutely.
When they work against you, like with a credit card, high rates are bad. When they work for you, however, like in savings accounts, they can be amazing!
In fact, one of the best moves you can make for your money looks like an even smarter move today than it did 24 hours ago. I'm talking about opening an online high-yield savings account. (HYSA for short.)
Savings accounts at some banks only give you a fraction of a percent back. (Seriously, I know a megabank that shall remain nameless that is giving 0.02% to savers.) However, online HYSAs can give 4% or more. Not 0.04% -- 4.00% or higher! That's an enormous difference and can make it so much easier to build that all-important emergency fund or save for other goals.
So why does it look better today than yesterday?
Because it sure looks like these high returns are going to stick around for a while.
When the Fed cuts rates, returns on savings accounts tend to fall, too. We've seen that with HYSA returns in the last few months. They're a good bit down from the peaks they hit in 2024, thanks to the Fed cutting rates multiple times. However, now that it appears that the Fed is going to leave rates as they are for a while, the decreases may stop for a while.
Higher savings rates for a longer time equals more money in savers' pockets, and that's a really good thing.
The HYSA I use
I opened a HYSA with Bask Bank a couple of years ago, and I've been happy with them. (Note: This isn't an advertisement. They have no idea I'm doing this, and I'm definitely not getting paid for placement.) However, there are many, many, many other options out there. This page from DepositAccounts.com has a great list of what's out there, as well as a really helpful, easy-to-read breakdown of everything you need to know when shopping for one of these accounts, including pros and cons. (Another note: DepositAccounts is owned by LendingTree, which is my employer, but I'm not getting any compensation for this link either. I just really think the site is a great resource.)
The simple truth is that if you have a savings account with a big bank and haven't shopped around for better returns in a while, you're almost certainly leaving money on the table. And that's the last thing any of us need today.
If you end up signing up for a new HYSA soon, I'd love to hear.
Or if you're in love with the HYSA that you've had for a while, I'd like to hear which one.
Thanks!
Matt
loved this! and so true!