The Fed Cut Rates Again -- and I'm Still Earning Over $1,000 a Year in Interest
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Even after back to back rate cuts in September and October (and more expected in coming months), my high-yield savings account is still holding strong at 4.20% APY.
I've got about $25,000 parked there, and I'm on pace to earn over $1,000 in interest this year.
Here's why I'm not sweating the recent cuts.
How I'm still earning 4.20% despite falling rates
Most banks have trimmed APYs after the two recent Fed rate cuts. But some online banks have held their APYs firm.
My current high-yield savings account (HYSA) is still paying 4.20% APY. And with about $25,000 in there I'm on track to earn about $1,050 a year in interest.
Of course, rates will probably drop a bit in the coming months. But even if they drop to the 3.50% APY mark, I'll still likely clear around $900 by this time next year.
One of the highest rates right now comes from LendingClub LevelUp Savings, offering 4.20% APY with $250+ in monthly deposits. Learn how it works and see if it fits your savings style.
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- Competitive APY
- No fees
- Easy ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- Requires you to make monthly deposits to earn the best APY
- ACH outbound transfers limited to $10,000 per day for some accounts
- No branch access; online only
The LendingClub LevelUp Savings account has a lot to offer. At the top of the list is its high APY, though you must deposit monthly to earn the best rate. Next is zero account fees, a strong and straightforward perk. Finally, you get a free ATM card, which you can use to withdraw from thousands of ATMs nationwide. Interested? You can open an account with $0.
CDs offer guaranteed returns -- but there's a catch
Certificates of deposit (CDs) offer guaranteed returns if you lock in your cash for a fixed period.
For example, right now you can get a 12-month CD term in the 3.80% to 4.00% range, and earn that rate for the full year.
CDs are solid options if you want predictable interest and you're okay with giving up access for a bit.
But personally, I still prefer my HYSA for one simple reason: flexibility.
If I suddenly need $3,000 to fix my car, or find an investment opportunity I want to put $10,000 into, I can withdraw my money anytime from my savings account.
With CDs, there's a penalty for withdrawing money early. And while I could technically squeeze out a little more interest by locking in a CD, the flexibility tradeoff just isn't worth it for me.
How I'm planning ahead for more rate cuts
Even though I'm feeling good about where my savings sit today, a lot can change in a year. Here's what I'm keeping an eye on:
- Monthly rate drops -- Some banks move in lock-step with Fed rate changes. Others lag behind. I browse the top high-yield accounts every so often to make sure my bank is still competitive.
- CD windows -- If short-term CD rates spike, or if a promo rate pops up in the mid- 4.00% APY range, I might consider moving a chunk of cash for a guaranteed yield.
- Hybrid options -- I'm seeing some fintechs offer tiered savings structures (e.g., up to 5.00% for the first $5K). These might be worth exploring.
- Stock market dips -- To be honest I'm probably holding more cash than I need right now. If the stock market takes a dive or a long-term investment opportunity pops up, I'm ready to jump on it.
Everyone handles their cash a little differently. I'm just trying to stay flexible and make sure my money's still pulling its weight.
My $1,000 takeaway
It's easy to get caught up with every Fed rate change and chasing the "perfect" APY.
But I'm just glad my savings is earning more than it used to. A few years ago, I was earning pennies on my cash at a big-name bank. Now I'm earning hundreds on that same money just by keeping it in the right account.
Some of today's top high-yield savings accounts are still offering rates north of 4.00% APY. And while they won't last forever, they're worth taking advantage of while you can.
If you've got money sitting idle in a low-yield account, now's the time to make it work a little harder.
It only takes five minutes to switch. Explore today's top-paying HYSAs and see how much more your savings could be earning.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.