Business, Finance & Tech
Federal Reserve Holds Rates, Analysts Say Now Is the Time for High-Yield Savings
The Federal Reserve announced Wednesday it will keep interest rates between 4.25% and 4.50%, holding steady instead of lowering them. Federal Reserve Chair Jerome Powell said recent indicators suggest the growth of economic activity has moderated.
For consumers, this decision means borrowing money for mortgages, car payments, and credit card debt will remain expensive. However, there is an upside. Higher interest rates often lead banks to offer higher annual percentage yields on savings accounts, creating an opportunity for savers.
Bankrate financial analyst Stephen Kates explained that now is a good time to consider high-yield savings accounts and certificates of deposit (CDs). While traditional savings accounts average an annual yield of just 0.56%, high-yield accounts can offer rates of 4% or more.
A Bankrate analysis shows that moving $5,000 into a high-yield savings account and adding $200 a month for five years at a 4.25% rate could earn nearly $2,500 in interest over that time.
“You’re getting a really healthy yield compared to where we were at over the last 15 years,” Kates said.
High-yield savings accounts can change their interest rates at any time, while CDs typically lock in a rate for a fixed term. Both account types may have restrictions on withdrawals.
Experts advise comparing online banks with larger banks when looking for a high-yield account to maximize returns.
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By: NBC Palm Springs
July 30, 2025
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