Interest Rates Are Sizzling This Summer. Here’s How You Can Cash In

Until recently, reviewing the interest earned on my savings account was a snoozefest. If I was lucky, my balance increased a whole cent or two each month. 

Interest rates — like temperatures — are high right now. You just need to look in the right place. Instead of the meager annual percentage yield I’m getting with my current savings account, I can net up to 4.5% APY with one of today’s top CDs. That means my interest earnings can grow exponentially, instead of limping along like they are now.

But, as with temps, what goes up must eventually go down. The Federal Reserve held interest rates steady at last week’s meeting, but it could begin cutting rates as early as July. So, I’m moving my money to a CD ASAP, before things start to cool.

Read more: This Shockingly Simple Trick Doubled My Savings in One Year

Low risk, guaranteed returns? Yes, please!

CDs aren’t exciting, and they won’t make you rich overnight. But boring and predictable can be a good thing, especially in today’s economy, when people are scared to invest and nervous to spend. Stock market swings, tariff fallout and stupidly high prices are making savers run to safety. 

When you lock up your savings into a CD for a set term and leave it untouched, your earnings are guaranteed. Your APY won’t drop even if overall interest rates drop. It’s a quiet, easy way to get a little extra cash, kind of like discovering a $10 bill in your jeans pocket every month.

Watch this: These Are the Safest Places to Keep Your Money Right Now

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Why now’s the time to lock in your APY

The Fed left its benchmark interest rate unchanged at last week’s meeting on June 18. Experts say the central bank will keep borrowing rates high for a couple of months, with most saying a rate cut won’t come until its Sept. 17 meeting. But they don’t rule out the possibility of a cut as early as July 30.

After the Fed hiked its benchmark interest rate several times between 2022 and 2023, many banks raised the rates they were offering for savings accounts and CDs to attract more customers and boost their cash flow. Once the Fed started cutting rates last year, banks started lowering their APYs so they wouldn’t have to pay as much interest to customers.

Bottom line? If you have extra money, move it somewhere safe so it can actually grow. 

High-yield savings accounts also earn big

If you think you’ll need access to your money, a high-yield savings account could be a better fit. Most CDs impose a penalty if you pull out your funds before the maturity date, but a HYSA is more flexible, allowing you to add deposits and withdraw funds as needed. 

Some APYs on high-yield savings accounts are also in the 4% range, making them a better option over traditional savings accounts. But, unlike a CD, HYSAs don’t lock in your interest rate, so your returns are variable and less predictable. 

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