Where you should put your money in 2023
Summary
Interest rates have risen as the Federal Reserve works to reduce inflation, making borrowing more expensive but also increasing the returns on some savings options. High-yield savings accounts, certificates of deposit (CDs), and money market accounts now offer higher interest rates, helping savers earn more on their savings with relatively low risk.Key Facts
- The Federal Reserve raised interest rates over 17 months to fight inflation.
- Higher interest rates increase the cost of loans like credit cards, personal loans, and mortgages.
- High-yield savings accounts offer annual yields around 4.30% to 5.50%, much higher than the average savings account rate of 0.42%.
- These high-yield accounts are often offered by online banks with fewer overhead costs.
- Certificates of deposit (CDs) pay fixed interest rates for a set term, usually from one month to five years.
- Withdrawing money early from a CD usually triggers fees, often losing some or all interest earned.
- Money market accounts combine savings and checking features, often with higher interest rates and easier access to funds than CDs.
- Money market accounts may require higher minimum balances, or you could choose a high-yield savings account instead.
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