3 savings accounts that are outpacing inflation to consider now
Summary
Inflation has recently decreased but remains above the Federal Reserve's target of 2%, so many Americans are looking for ways to protect their savings. Three types of savings accounts—high-yield savings accounts, money market accounts, and certificates of deposit (CDs)—offer interest rates higher than current inflation, helping money grow despite rising prices.Key Facts
- Inflation rate in July was 3.4%, down from over 4% in May.
- Core inflation, which excludes food and energy, fell slightly from 2.6% to 2.5%.
- Traditional savings accounts have very low interest rates around 0.38%, which do not keep up with inflation.
- High-yield savings accounts now offer interest rates above 4%, beating inflation while allowing easy access to funds.
- Money market accounts pay about 3.9% interest, have check-writing abilities, and may increase rates if the Federal Reserve raises rates again.
- Certificates of deposit (CDs) offer fixed rates up to about 4.4%, providing predictable earnings but require funds to stay locked in until maturity.
- CDs have penalties for early withdrawal, so they are best for money you don’t need to access quickly.
- These three account types can help protect savings from losing value due to inflation.
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