Savers haven’t had a lot to celebrate lately. High-yield savings account and certificate of deposit (CD) rates have dropped sharply in the wake of the Federal Reserve’s half-a-percentage-point rate cut on Sept. 18. And experts predict two more rate cuts in the next two months.
Some people are flocking to CDs as a way to lock in the 4.00% APY while it’s still available. But I’m sticking with my high-yield savings account even though I know I’ll earn less and less interest as time goes on.
Interest isn’t the only value a bank account can offer
The biggest deciding factor for most people, including myself, when choosing between a high-yield savings account and a CD isn’t the interest rate. It’s the accessibility.
Savings accounts let you withdraw your money as needed, though some limit you to six penalty-free withdrawals per month. There’s usually no limit on how many deposits you can make.
Our Picks for the Best High-Yield Savings Accounts of 2024
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American Express® High Yield Savings APY 4.10%
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Min. to earn $0
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APY 4.10%
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Min. to earn $0 |
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Capital One 360 Performance Savings APY 4.10%
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Min. to earn $0
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APY 4.10%
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Min. to earn $0 |
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CIT Platinum Savings APY 4.70% APY for balances of $5,000 or more
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Min. to earn $100 to open account, $5,000 for max APY
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APY 4.70% APY for balances of $5,000 or more
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Min. to earn $100 to open account, $5,000 for max APY |
CDs, on the other hand, usually require you to give up access to your funds for the full CD term. If you take your money out early, you must withdraw it all at once. You’ll lose all the interest you would’ve earned throughout the rest of the term, and you’ll likely pay a penalty equal to several months of interest payments.
For me, the accessibility a savings account offers is too valuable to give up, even for higher interest rates. I keep my money in a Discover® Online Savings account so I can access it at any time. Even though I know its rates will fall from the 4.10% APY I’m earning now, I’ll continue to earn a rate that’s well above the national average. If you want to earn a competitive rate with no limitations on access, give the Discover Online Savings account a closer look. Those who open an account with the promo code TMF924 by March 13, 2025, could earn up to $200 as a sign-up bonus, depending on how much they put into the account.
Now’s the time to make the switch to a high-yield savings account
Just because I’m keeping my money where it is doesn’t mean that’s the right decision for you. If you’re still banking with a brick-and-mortar institution paying you 0.01% APY, you can definitely do better. No matter how far interest rates fall over the coming months, you’ll come out ahead by making the switch to a high-yield savings account.
In addition to offering higher APYs than traditional savings accounts, high-yield accounts with online banks are also known for their lack of common banking fees. This could help you save money compared to a brick-and-mortar savings account that charges you every month to own the account.
You don’t have to cut ties with brick-and-mortar banks forever if you’re not comfortable. You may prefer to keep a traditional checking account so you can access cash as needed. You should be able to link this with your high-yield savings account, so you can easily transfer funds between them.
I mentioned the Discover® Online Savings account above, but if you don’t think that’s the right fit for you, there are plenty of other options. Check out our favorite high-yield savings accounts that could help you start growing your wealth.