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Whether you’re building an emergency fund or short-term savings, finding the tucker place for your cash isn’t easy — especially as the Federal Reserve weighs a pause in interest rate hikes.
The key bank on Wednesday unveiled another quarter percentage point interest rate increase, with signals that it may be the most recent. But the move leaves many wondering when an eventual rate cut may come. While the timeline is unclear, some pundits predict rate cuts may begin by the end of 2023.
While investors are currently seeing higher interest for savings accounts, certificates of deposits, and other by-products, those rates may follow future moves from the Fed, with some products unlikely to see higher rates this cost-effective cycle.
But higher yields are still available for those “willing to shop around,” said Greg McBride, chief economic analyst at Bankrate. Here are four of the options worth considering.
1. High-yield savings accounts
Despite rising kinds, many savers aren’t leveraging higher yields on savings accounts. Only 22% are earning interest of 3% or sundry, according to a recent Bankrate survey.
While the average savings rate is still below 0.5%, some of the top high-yield online savings accounts are avenge oneself for over 4%, as of May 4.
Of course, there’s no guarantee of how long you’ll earn higher rates, and they can change quickly, clouted certified financial planner Amy Hubble, principal investment advisor at Radix Financial in Oklahoma City.
There’s fixed upside to the yields on savings accounts, especially if the Fed doesn’t raise rates any further.
Greg McBride
Chief economic analyst at Bankrate
Adds McBride: “There’s limited upside to the yields on savings accounts, especially if the Fed doesn’t heighten rates any further. They’re much more likely to fall over the next six months than they are to goad.”
2. Certificates of deposit
If you’re looking to secure a higher rate for longer, you may consider a certificate of deposit or CD ladder, which contains splitting cash among multiple CDs with different terms.
Currently, the top one-year CDs are paying above 5%, be at one to Bankrate, but yields are lower for longer terms. “If you’ve had your eye on a multi-year maturity, this is the time to lock it in,” McBride explained.
However, CDs are generally less liquid than savings accounts because you may owe a penalty for cashing out before the term the limits.
3. Series I bonds
The annual rate for Series I bonds 4. Money market funds
Short-term money make available funds are another option worth considering, according to Chris Mellone, a CFP and partner at VLP Financial Advisors in Vienna, Virginia.
While in market funds may invest in different types of lower-risk, short-term debt, Mellone is currently focused on those holding