If inflation cools, where should you keep your savings?

The Latest inflation numbers are in, and they’re… slightly better than them.

The Labor Department’s latest Consumer Price Index (CPI) summary, released on Tuesday, reported that CPI rose at an annual rate of 4% in May. While the upward move isn’t necessarily great news, it’s the smallest increase we’ve seen since March 2021, which is when inflation is finally starting to cool.

Many economists have already predicted that the Fed’s next meeting on June 14 will result in a pause in rate hikes. After 10 straight increases starting in March 2022, that will be welcome news for Americans who are feeling the pinch as their purchasing power continues to decline.

There are many Americans Cut back on their savings As a result, it said, cooling inflation means they may be able to put more of their money toward savings again. But where is the best place to put it?

Check today’s savings rate to see how much you can earn right now.

If inflation cools, where should you keep your savings?

The following savings vehicles are smart places to keep your savings regardless of the economy. But with inflation cooling, they can be especially valuable.

Certificate of Deposit (CD)

Certificate of Deposit (CD) Earn interest for a set of savings products that duration (usually from three months to five years). In exchange for keeping your money in the account for that term, you can earn a Competitive interest rates It doesn’t depreciate while you own the CD.

“CDs pay a fixed interest rate and can offer higher interest rates than other types of savings accounts,” says Greg Goff, founder and financial planner at Sound Wealth Management.

Money you deposit in a CD is protected up to $250,000 per institution account if it’s held at an FDIC-insured bank or NCUA-insured credit union. And, unlike volatile investments like stocks, you never lose your balance or earned interest if future economic developments scare the market.

“A CD is worth considering when both interest rates and market risk are high,” says Goff “If you can earn a safe return without exposing yourself to unnecessary market risk, you should consider investing.”

Interest rates are still high and a rate break is expected, now is the time Open a CD before rates drop and lock in a good rate.

Compare your CD options here to find the best account for you.

In a high-yield savings account

CDs are great if you can tie up your money for the entire term. But for savings you may need to access, a High Yield Savings Account A good choice.

“For consumers who have an emergency fund or are building an emergency fund, a high-yield savings account can be a good place to stash that cash,” says Kristen Beckstead, CFP, ChFC, vice president and financial planner at First Horizon Advisors. ” . “Unlike CDs, high-yield savings accounts typically don’t have maturity dates or early withdrawal penalties. This means you can access your money whenever you need it without incurring fees.”

Some offer high yield savings accounts Same benefits as CDwith FDIC or NCUA protection and High interest rates. Unlike CDs, interest rates for high-yield accounts fluctuate based on the federal funds rate, but you can never lose your principal or interest earned to date. So, whether you’re building one emergency fund Or by saving for a specific expense, these accounts can help grow your money while still ensuring you can access it when you need it.

“A high-yield savings account is a great tool for consumers who are saving for a short-term goal like a vacation or buying a car,” says Beckstead. “You can usually start a high-yield savings account with a relatively small amount and add to it regularly.”

Start your search for a savings account by checking out today’s best offers here

Bottom line

While recent inflation numbers are tentatively promising, core inflation currently stands at 5.3%, above the Fed’s 2% target. And while the Fed may avoid a rate hike in June, interest rates remain high.

CDs and high-yield savings accounts are great ways to take advantage of This is still a high rate. By acting now, you can make the most of today’s rate environment and Grow your savings quicklyRegardless of the next inflation number.