The Best Savings and CD Rates Can Earn You 3.50% – 4.00% Interest. What to Know After This Week’s Fed Meeting

The Federal Reserve this week announced another rate hike. Before the expected increase, many banks raised rates on savings and CD accounts in anticipation. 

While higher federal interest rates lead to better rates on savings accounts, — a good thing for savers — still-high inflation can make saving your money more difficult. For Americans already feeling financial uncertainty, spending more on everyday essentials only makes it more difficult to secure a savings safety net. 

“We want to be able to live on what we make and keep our expenses in alignment,” says Andrew Tudor, certified financial planner and founder of Alchemist Wealth, a financial planning firm. “And if expenses are going up and incomes are not rising as high as they are, then we’ve got to learn to cut back.”

Fortunately, savings account and CD rates we track at NextAdvisor continue to go up. Even if you’re only able to save a few extra dollars, the right savings account can help you boost your balance as you work toward your goals. 

Read More: What the Fed’s 0.75% Rate Hike Means for Your Money, and Why Now Is a Great Time to Save

The Best Savings Rates This Week 

Many of the high-yield savings accounts we track raised their own rates ahead of this week’s Fed meeting. 

National average savings account rates reported by Bankrate and the Federal Deposit Insurance Corporation (FDIC) remained the same at 0.16% and 0.21% this week. Both of these indexes track not only high-yield but also traditional savings accounts, which tend to lag far behind with rate hikes.

The average rate for the best savings accounts we track at NextAdvisor went up from 2.54% to 2.73%, week over week. But many banks made significant rate jumps ahead of next week’s Fed meeting. In fact, two banks on our list now offer a sky-high 3.50% APY. Here are a few of the highest savings account rates available right now: 

These savings account rates will only continue to go up if Fed rate hikes continue, says Greg McBride, CFA, chief financial analyst at Bankrate. Like NextAdvisor, Bankrate is owned by Red Ventures. 

“You’ve got a very active Federal Reserve, and that’s kind of the rising tide that lifts the ships,” says McBride, predicting that some savings accounts could reach 4% this year. “Banks that want to keep deposits or bring in new deposits, they need to be competitive.”

The Best CD Rates Right Now 

CD rates also went up for all terms again this week, following experts’ predictions. 

According to Bankrate’s weekly national rate survey, one-year CDs went up 0.02% to 1.05%, while three- and five-year CD rates only increased by 0.01%, pushing the averages to 0.97% and 1.00%, respectively. The FDIC’s CD rate index (which updates monthly) still shows an average of 0.71% for one-year, 0.77% for three-year, and 0.83% for five-year CDs.  

Among the high-yield CDs we track at NextAdvisor, the average one-year CD rate is now 3.61%, three-year CDs are at 3.41%, and five-year CDs are at 3.66%. Here are some of the best CD rates this week by term: 

1-Year 

3-Year 

• Synchrony Bank: 4.26% APY
• CFG Bank: 4.20% APY 
• Capital One: 4.15% APY 

5-Year 

• CFG Bank: 4.30% APY
• Synchrony Bank: 4.26% APY
• Bread Savings: 4.25% APY 
• Capital One: 4.25% APY 

Even though rates are rising for all CD terms, it’s best to stick to short-term CDs as the Fed continues rate hikes. Locking in a long-term rate now means missing out on a better interest rate in days or weeks. 

Luckily, the rate difference between long and short CD terms isn’t too substantial right now.

“We have this really weird environment where we have longer-term rates pretty much sitting at the same rate as short-term rates,” says Shannon Grey, certified financial planner and founder of InvestEdge Planning, a financial planning firm in San Diego.

Emergency Savings Amid Rising Prices

Between rising costs and growing economic uncertainty, it’s more important than ever to balance savings with your monthly budget. 

Not only should you get your emergency fund in a secure place, Tudor says, but also determine the right spending ratios to cover expenses and meet your goals.

Tudor recommends putting money in a high-yield savings account to earn a small boost while keeping the cash available in case you need it for an unexpected expense or sudden income loss. The goal is not for the money to outperform inflation, but rather to keep it safe and easily accessible, he says. 

“We don’t know whether we’ll pick up in a year and prices will be higher than they are now,” says Tudor. “We don’t know if rates will be a lot higher than they are now. So we’re having to make some tough decisions.” For many families at the top of their budgets, that could mean only having one car or cutting down other important expenses, he adds. 

READ MORE: We Need to Talk About Emergency Funds. How Three Experts Are Reframing Their Savings Strategies

Building an emergency fund from zero can be overwhelming: experts recommend aiming for three to six months worth of expenses, which for many people can equal thousands of dollars.

Instead, focus on saving what you can consistently. You may set up recurring automatic transactions to a savings account to set it and forget it. Most importantly, put the money in an account that lets you earn interest on your balance as rates continue to rise. Your funds will keep up with inflation and the return can help you earn more on your savings. 

Don’t Forget Longer-Term Goals

If your emergency fund is in a good place and you’re saving toward longer-term goals, such as a down payment on your first home or a new car, a CD can be a good savings option for your cash. 

CDs don’t offer as much flexibility as high-yield savings accounts. But they’re not as risky as today’s volatile stock market for savings you’ll want within the next couple of years.

“What we’ve watched bonds do this year, and what we’ve watched the stock market do this year should give some people the confidence to take up a 3% CD and feel good about it,” says Tudor. 

For instance, if you’re planning to buy a home next year, earning 3-4% APY on a nine- or 12-month CD can help you make sure the money is safe, earning interest, and available when you need it. 

Before you lock in a CD term though, consider how different terms may suit your goals. For instance, if you’re not planning to use the money for the next 5 – 10 years, you may choose to invest it for a better return compared to what CDs are offering. 

And even as you save for other goals, don’t forget the importance of saving for retirement in a dedicated account like a 401(k) or Roth IRA.

The Best Savings and CD Rate FAQs

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Whether building your emergency fund or saving toward a long-term goal, these resources can help you build your savings strategy with the best savings tools and tips.