Inflation has come down. Here’s what that means for savings rates.

Persistent inflation has plagued US consumers over the past two years. After reaching a 40-year high in 2022, it remains elevated throughout 2023, leading the Federal Reserve to continue raising the federal funds rate in an effort to combat it.

The good news is that these hikes seem to be working. According to the latest Consumer Price Index (CPI) report, Inflation cools in June, growing at 3% per annum. That’s the slowest pace we’ve seen since March 2021, bringing us closer to the Fed’s target of 2%.

This doesn’t mean we’re out of the woods yet, but it’s a sign we’re headed in the right direction. And for those looking to put money away for the future, that means now is the time to make the most of fixed-high interest rates before they drop.

Check today’s savings rate here to find out how much you could earn.

Inflation has come down. Here’s what that means for savings rates.

High inflation hurts the purchasing power of the dollar, so it takes more money to buy the same goods and services. It costs banks more to lend money, so they raise interest rates on savings accounts to attract new customers, whose deposits can improve their cash flow.

But when the rate of inflation falls, so does the interest rate on savings accounts. Fortunately, lower inflation means more money for consumers. those who have Storing them on hold Savings may be able to resume, and those saving have more money to squirrel away.

It’s also worth noting that the rate cooling we saw in June doesn’t mean rates will drop significantly anytime in the near future. The Fed has signaled two more rate hikes for 2023, with those coming soon after the June 25-26 meeting. So, conservationists will benefit Taking advantage of rates while they are still relatively high.

See the most up-to-date savings rates here.

What should you do now?

Although we are no longer near peak inflation, savings rates are still high across the board. That makes now a great time Increase your balance By taking a few smart steps.

Open a high-yield savings account

High Yield Savings Account Offers interest rates 10 times higher (if not higher) than regular savings accounts. This can add up quickly, especially when the overall savings rate is high. something Top savings accounts Market offers rates up to 5.05% APY.

Interest rates on savings accounts are variable, meaning they go up and down in line with the federal funds rate. By opening a high-yield savings account now, you can maximize your earnings from today’s high rates for as long as possible.

Check out today’s top savings accounts here.

A high CD rate lock

Certificate of Deposit (CD) Often high yield savings accounts have higher rates. Today’s Top CD Offered rates are as high as 5.48% APY. Even better, your rate is locked in when you open the account, which means you’ll earn that amount Position of CD.

If lower inflation rates lead to lower interest rates, securing a higher CD rate now will keep your earnings higher. If interest rates rise, you can take advantage of them with an opening Short term CDs Now and, when it matures, put the funds into a new CD at a higher rate. You can do this too Ladder multiple CDs With various terms to maximize your earnings while giving you regular access to funds when needed.

Check out today’s best CD accounts here.

Bottom line

Cooler inflation is good news for many consumers, including those looking to boost their savings. This can give you wiggle room in your budget to put more money away for the future, and is a sign that now is a good time to make the most of that money before interest rates drop. By opening a High Yield Savings Account or CD (or both) Today, you can make full use of both these benefits.