With a high-interest savings account, you can still earn up to 5.50% – for now

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Returns of 5.25% to 5.50% on your cash deposits are easy – right now

In April, the nation’s highest savings account interest rate peaked at 5.55% – believed to be the highest offer available nationwide since 2001. Although that rate is no longer available, you can still earn almost as much at the current national leader, Poppy Bank (scroll down to the Poppy Premier Online Savings section).

Poppy not only pays 5.50% APY on a minimum balance of $1,000, but also offers a rare and useful benefit: It is guarantee Your interest rate for three months from the time you open your account. Normally, savings accounts offer no guarantees, and the bank can lower your interest rate at any time, so a three-month guarantee of the highest annual percentage yield in the country is the icing on the cake.

But Poppy Bank isn’t your only great option. Another 13 high-yield savings accounts pay 5.25% or more, including many with no minimum balance requirement. And all of the banks in our ranking are government-insured.

Why savings accounts are yielding record interest rates today – but will soon fall

With savings rates as high as 5.50%, there’s almost never been a better time to keep money in a high-yield savings account in the last 20 years. Today’s nation-leading rate of 5.50% is especially notable considering the nation’s top rate in early 2022 was a meager 0.70% APY.

Today’s interest rates in the mid-5% range are a compliment to the Federal Reserve. That’s because the central bank has raised the benchmark interest rate dramatically to combat inflation, which had reached a 40-year high. With 11 rate hikes between March 2022 and July 2023, the Fed raised its benchmark interest rate by a total of 5.25 percentage points, reaching the highest level since 2001.

This is important for savers because the prime rate directly affects how much interest banks and credit unions are willing to pay on savings accounts, money market accounts, and certificates of deposit (CD). When the prime rate is high, interest rates for bank customers also rise.

But now inflation has cooled. While it has not yet reached the Fed’s target of 2%, the most recent reading was just 3%, as measured by the June Consumer Price Index (CPI) released on July 11. This has not only allowed the Fed to take its foot off the accelerator on interest rate hikes, but has also led the central bank into a phase of Cut Prices.

When do interest rates on savings accounts start to fall?

Financial markets are largely expecting the Fed to announce a rate cut at its September 18 meeting, but the magnitude of the cut is in question. Currently, CME Group’s FedWatch tool shows that investors are betting about 50/50 on whether the Fed will cut rates by 0.25 percentage points or 0.50 points.

In addition, a majority of investors believe that the second and third rate cuts will be implemented after the Fed’s November and December meetings. In fact, about 70% of Fed funds traders currently expect the Fed’s benchmark interest rate to be cut by at least a full percentage point by the end of 2024.

Although savings account interest rates and the federal funds rate do not move in lockstep, an almost certain rate cut by the Fed could prompt banks to lower their savings account interest rates. before September 18. Once the central bank makes the move official – and banks see what cut the Fed has decided on – interest rates on more savings accounts will fall.

Because the base rate could be reduced by multiple rate cuts over the next year or two, interest rates on the best savings accounts are also expected to experience a long downward trend. While there’s nothing you can do to prevent the drop (unless you opt for Poppy Bank’s offer with the three-month interest rate guarantee), there are things you can do to ensure you get one of those high interest rates. Now-while you still can.

For a longer interest rate fixation, you should consider a CD with top interest rates

If you can commit to not touching some of your money for a while, it’s also an excellent time to open one of the best nationwide CDs available right now – before interest rates start to drop. While interest rates for new Interest rates on CDs will fall along with the prime rate. Any CD you open now offers a guaranteed rate of return that stays with you until the end of the term.

With our daily ranking of the best CD rates, you can lock in an interest rate of 5.25% to 5.40% on the best 6-month CDs, or 5.20% to 5.30% on a top 1-year CD. If you can afford to invest some of your savings for even longer, numerous offers pay 5.00% or more on 18-month, 2-year, or 3-year terms—which can guarantee your interest rate through 2027.

The top interest rates for 4- and 5-year CDs are now in the mid to high 4 percent range, but will remain locked in for you until 2028 or even 2029.

How we find the best savings and CD interest rates

Each business day, Investopedia tracks interest rate data from more than 200 banks and credit unions that offer CDs and savings accounts to their customers nationwide and ranks the highest-interest accounts daily. To be eligible for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions) and the minimum deposit in the account cannot exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member, if you don’t meet other eligibility criteria (for example, if you don’t live in a certain area or work in a certain type of job), we exclude credit unions whose donation requirement is $40 or more. For more information on how we choose the best rates, see our full methodology.