High-yield savings accounts are still an effective way to earn meaningful returns and keep your money safe.
Chances are that you've heard the Federal Reserve kept interest rates the same for the second time in a row. The target federal funds rate sets the foundation for the interest you earn on savings and other deposit accounts. It's also a deciding factor in the interest you pay on credit cards, mortgages and other loans. That means when the Fed increases its target federal funds rate, debt costs more and returns on savings and other deposit accounts grow.
The federal funds rate is cyclical. During high inflation cycles, the Federal Reserve increases rates. When inflation slows to a crawl, the Fed decreases rates. So, the interest rate pause is a temporary occurence. When the pause ends, there's a strong argument that rates will begin to tick up again. After all, third quarter GDP grew at a rate of 4.9% year-over-year, suggesting inflation is still a cause for concern.
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