How to use rising interest rates to your advantage

News this week that The Federal Reserve is raising interest rates Still again might be expected, but it was not particularly welcome. The Fed’s move to raise rates to between 5% and 5.25% will push mortgage and mortgage refinance lending rates higher. Interest rates on credit cards and personal loans will also likely suffer, all while still battling high (albeit lower) rates. Inflation.

That said, there is a silver lining to increased rates, especially for those who are saving their money. When the Fed bumps rates they usually move across the board, meaning deposit vehicle interest rates eg High yield savings And Certificate of Deposit (CD) The account will also increase.

So, if you don’t have money in one or both of these accounts, you might want to reconsider. You can start by exploring your high-yield savings account options here now to see how much more you can earn.

How to use rising interest rates to your advantage

There are multiple ways to take advantage of today’s high rate environment. Here are the two main ones:

Open a high-yield savings account

Even with recent rate activity, the average interest rate on regular savings accounts currently sits at around 0.39%. but Interest rates for high yield savings accounts — which work So do regular accounts — significantly more. The rates for such accounts are around 3.5% to 4.5% or more depending on the bank and other factors. And that’s before this week’s rate hike, which means rates on these accounts are still on the upswing.

If you don’t have a high-yield account you probably do lose money By leaving it where it is. Using a $5,000 deposit, for example, you’ll only grow your savings fund to $5,019.50 after a full year (at a rate of 0.39%). But if you transfer it to a high-yield account at 3.5%, you’ll easily increase your bottom line to $5,175.00 – a $155 difference! And that’s at 3.5% — you can easily find an account with a higher rate, especially after the Fed’s latest bump.

So don’t hesitate. Start exploring high-yield savings accounts today and start taking advantage of today’s rising interest rates

Open a certificate of deposit (CD) account

Rate in CD It has also jumped in recent months. It’s not uncommon to find CDs in the 3.5% to 4.5% range, though they may be heading higher in light of recent rate hikes.

A CD is a smart way to protect and grow your money. But you can’t access it as you would a high-yield savings account. CDs are offered in different ranges Conditions (or length) of time you lock your money in to earn that high rate of interest. If you try to withdraw your money early, you will be penalized, possibly significantly (you may lose all or most of the interest you have accrued). Still, it could be a worthwhile option, especially if the Fed stops issuing rate hikes, as it indicated in its latest announcement. Account holders can also be potential “ladder” their CD account so that they can access part of their funds at different times.

As with most financial products and services, it pays to shop around to find a CD account with the best rates and terms. You can start your search now here or using the table below.

Bottom line

Yes, interest rate hikes are not very good, especially when they are inflationary and high prices food and service. But savvy consumers can still take advantage of the environment by moving their money to a high-yield savings or CD account, or both. Be sure to shop around for the rates and terms that work best for you before signing on the dotted line.

You can now explore your high-yield savings account options here!