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High-Yield Accounts: Make the Most of Your Savings

Matthew Levy Updated: October 1, 2023 • 4 min read
high-yield savings accounts

Savers benefit greatly during times of inflation as their money earns more when interest rates rise. While the Federal Reserve has recently paused interest rates, it doesn't mean that high-yield savings products are no longer worthwhile investments. Continue reading to grasp the implications of high-yield savings in a high interest rate environment.

What are High-Yield Savings Accounts?

High-yield savings accounts offer higher interest rates than traditional savings accounts. This means your money can grow even faster while it sits in your account.

When we talk about the interest rate these accounts offer, we use the term APY, which stands for annual percentage yield. The higher your APY, the faster your money grows in that particular savings account.

It's important to know that the APY offered by savings accounts can change at any time. These rates are variable and often fluctuate based on the Federal Reserve adjusting its benchmark interest rate.

While the national average return on a traditional savings account is just 0.25%, high-yield savings accounts provide much higher interest earnings on your savings. In 2023, many of these accounts offer interest rates over 4%.

That's why people choose to keep their cash in a high-yield savings account - to achieve their goals faster. Whether it's saving up for a short-term plan like a vacation or preparing for a significant expense down the road, like a home down payment.

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High-Yield Savings Products: Current Rates

High-yield savings accounts and Certificates of Deposit (CDs) are popular savings options due to their typically higher interest rates compared to traditional savings accounts. 

Given the Fed's interest rate pause, there's potential for a slowdown in the rising yields seen in these high-yield products. That said, it's important to remember that rates on these accounts are still near historic highs due to the series of rate hikes before the pause. So, high-yield savings products remain a great option for savers looking for better returns on their deposits.

The 3-month CD rates have jumped to over 5%, significantly higher than the 0.09% seen back in June 2021.

It's also worth noting that different financial institutions can react differently to the Fed's actions. Some may choose to keep their rates steady, while others could decide to decrease them. For savers, this means it may be a good time to compare rates across different institutions to find the best yields. 

With Certificates of Deposit (CDs), the fixed-rate nature of these products can provide a degree of certainty in an uncertain rate environment. Despite the pause, CD rates remain relatively high, offering a solid return for savers willing to lock their money in for a set period.

Remember, the Fed's pause is a temporary halt in rate hikes, not a reversal. As a saver, keeping a close eye on any changes in savings rates and being ready to make informed decisions is crucial in this dynamic financial environment.

It's crucial to stay informed and flexible, making adjustments to your savings strategy as the market evolves.

Potential Strategies for Savers

In light of the Federal Reserve's recent interest rate pause, savers might need to rethink their strategies. Here are a few suggestions:

  1. Keep an eye on the market: Stay updated on financial news and be prepared to act if better opportunities arise. The Fed's moves often indicate a trend, but they don't necessarily decide what every bank does. Some banks might still raise rates on their high-yield savings accounts and CDs.
  2. Consider longer-term CDs: If you believe that the pause will persist or rates will decrease in the future, consider locking in the current rates with a long-term CD. These products typically offer higher rates than savings accounts or short-term CDs.
  3. Try a CD Ladder: A CD ladder, where you open multiple CDs with different maturity dates, can be a savvy low-risk investing strategy. It provides regular access to funds, takes advantage of higher rates on longer-term CDs, and allows for reinvestment if rates increase.
  4. Maintain a mix of savings options: Don't put all your eggs in one basket. A mix of liquid accounts, like a high-yield savings account, and long-term accounts, like CDs, can offer both flexibility and higher returns.



The pause in the Federal Reserve's rate hikes could change the landscape of high-yield savings products, but it's important to remember that these rates are still notably higher than they were a year ago, and significantly higher than just a couple of years ago. The climb may have slowed, but the view from the current peak is still appealing. It's crucial to stay informed and flexible, making adjustments to your savings strategy as the market evolves. Remember, smart saving is not just about chasing the highest rates, but about crafting a strategy that suits your financial goals and tolerance for risk.

Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.