- ORIGINAL NEWS
Cash savers still have an opportunity to beat inflation amid cloudy forecast for interest rate cuts
- SUMMARY
The Federal Reserve has been expected to decrease interest rates this year, but due to a strong economy and persistent inflation, the exact timing and extent of these cuts are uncertain.
Nevertheless, cash savers have the best opportunity for returns in years and should consider locking in high rates while they last.
Options such as certificates of deposit (CDs), Treasury bills, and Treasury Inflation-Protected Securities (TIPS) are offering attractive yields.
While Series I bonds currently provide a 5.27% return, they require longer-term investment.
High-yield online savings accounts offer more flexibility and interest rates above 4%, but only about one-third of Americans are taking advantage of these options.
Ultimately, the right investment choice depends on individual needs and the timing of goals.
Those with ample cash can diversify across multiple accounts with varying terms, while savers with limited funds may prefer a high-yield online savings account.
It’s important to prioritize FDIC insurance on all deposits to ensure protection against potential financial losses.
It’s also wise to carefully consider the timeframe and accessibility of funds before making any investment decisions.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“It may be a while longer before the Federal Reserve lowers interest rates, experts now say.”
“That means savers can still earn the best returns on their cash in years, following a ‘nuclear winter for the better part of the last 15 years,’ said Greg McBride, chief financial analyst at Bankrate.”
“‘We’ve now had two years in a row where both liquid savings and timed deposits like CDs [certificate of deposits] are paying yields that are well ahead of inflation,’ McBride said.”
“Cash savers have a variety of options in which to invest that are beating inflation, according to McBride.”
“‘It’s a good time to lock in,’ McBride said, with CDs, Treasury bills and Treasury Inflation-Protected Securities, or TIPs, all paying high rates.”
“Series I bonds have become a better deal, though not as many people are paying attention to them, McBride said. When I bonds were at 9.6%, they were just reimbursing savers for inflation, with no after-inflation return. Now, however, they provide an after-inflation return of 1.3% in addition to reimbursing savers for inflation, for a total of 5.27% available through April 30.”
“Online high yield savings accounts provide more flexible terms for accessing cash and annual percentage yields more than 4%, in many cases.”
Negative
“It is still uncertain when the Federal Reserve may cut rates and by how much.”
“The two top reasons respondents cited for not moving their money included wanting access to their cash through their local bank branch and being comfortable with their current financial institution.”
“However, for savers without much savings, a high yield online savings account still makes the most sense, he said.”