Interest Rates Are on the Decline. Here's What to Do With Your Cash Today
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The Federal Reserve recently projected a decline in interest rates through 2027 and beyond. That means today's high APYs will soon be a thing of the past.
The good news for savers: There are still plenty of reliable, hands-off ways to grow your money going forward. Here are three of the best of them.
1. Certificates of deposit (CDs)
When interest rates are on the decline, CDs are one of your best savings bets.
That's because CDs let you earn a high APY for months or years, locking up your cash for a set amount of time in exchange for a guaranteed return. Right now, top CD rates are hovering in the 3.90% range. That means you'll keep earning that high rate for the length of your term, even once other savings products have fallen off.
Looking to keep your cash somewhat flexible? Consider setting up a CD ladder -- splitting your money across CDs of different term lengths. For example, if you have $20,000 to save, you could put $5,000 into CDs of three, six, nine, and 12 months.
CD ladders give you access to part of your cash at regular intervals.. When one of them matures, you can either use the earnings as needed or reinvest them to keep the ladder going.
Ready to get started? Explore all of our favorite CDs and build a smarter savings strategy today.
2. High-yield savings accounts (HYSAs)
When you want to earn more on your money while keeping complete access to it, a high-yield savings account (HYSA) is the perfect option.
HYSA rates are variable, which means they'll rise and fall as interest rates change. But right now, top HYSAs are still offering rates around 3.90% APY, which means they're still a great place for your loose cash.
Perks to look out for include:
- FDIC insurance up to $250,000 per account, just like traditional banks
- No monthly fees or minimum balance requirements
HYSAs are ideal for all your short- and medium-term savings -- basically, any money you aren't planning on investing. Even if interest rates keep falling, your loose cash will earn a solid amount in interest and remain accessible at all times.
Ready to earn more on your savings? Check out our favorite high-yield savings accounts available today.
3. Low-cost index ETFs
Looking for a hands-off way to grow your cash, no matter how interest rates are trending? Index exchange-traded funds (ETFs) are a fantastic choice.
These funds track broad market indexes, like the S&P 500 or the total U.S. stock market. You're essentially buying into hundreds or thousands of stocks at once, which means your cash will be diversified and primed for long-term growth.
With low fees and strong historical performance, total-market and S&P 500 index funds are a great way to steadily grow your cash without breaking a sweat.
Ready to start investing today? Check out our list of top brokerages to find the one that's right for you.
Our Research Expert
Ryan Wilcox is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, auto insurance, and other personal finance topics. Ryan has been writing about credit cards and savings since 2022. Before joining Motley Fool Money, he was a full-time writer at The Points Guy, where he focused on maximizing credit card rewards and travel strategies. He holds a bachelor’s degree in English and American History from the University of North Carolina at Chapel Hill, where he also spent four years reporting for The Daily Tar Heel. With a background in both journalism and consumer finance, he brings a clear and thoughtful voice to money topics. Outside of work, Ryan is likely reading, writing, or updating his Letterboxd account.