Key insights
- The latest CPI report shows inflation at 4.2%, its highest in over three years, driven by high oil prices. This means cash in savings accounts earning less than 4.2% is losing purchasing power. While some high-yield savings accounts exceed this rate, many savers are earning significantly less. This elevated inflation environment suggests a continued need for higher APYs to mitigate purchasing power loss, potentially impacting consumer spending and investment decisions if savings rates lag significantly.
%3Amax_bytes(150000)%3Astrip_icc()%2Finflation-bojanstory-a74642460a704029af8a8a0c648c70c1.jpg&w=3840&q=75)
Get personalized, AI-powered answers built on 27+ years of trusted expertise.
The latest CPI report has put inflation at 4.2%, its highest reading in more than three years, as high oil prices tied to the unresolved Iran conflict have pushed consumer prices higher. That creates a tougher benchmark for savers: Any cash earning less than 4.2% APY is now losing purchasing power, because prices are rising faster than your savings balance.
But falling short of inflation is no reason to throw up your hands and settle for a weak rate. The closer your APY sits to 4.2%, the less ground your cash is losing. While an account paying 3.75% won't beat inflation right now, it will leave you in a much better position than if you're earning 1% or 2%. So it's still worth striving for the highest APY you can find in an account that fits your needs.
No one knows exactly where inflation goes from here, but many economists expect it to remain elevated for a while. If that happens, moving your cash to a higher-APY account now could help you lose less purchasing power for months to come.
More than a hundred banks and credit unions offer a nationally available high-yield savings account, but only six currently pay more than the new 4.2% inflation rate. Those accounts can help your cash keep pace with rising prices, though several come with balance caps, direct deposit rules, membership requirements, or other conditions.
You can get more details on the six accounts below in our daily ranking of the best high-yield savings accounts, which also includes 16 more options paying at least 4.00% APY.
Note that the best choice is not always the highest APY on the page. It's the highest APY you can qualify for, maintain, and use comfortably.
High-yield savings accounts can be a flexible place to hold cash, but their rates are variable, meaning they can change at any time. Certificates of deposit work differently: When you open a CD, the APY you lock in is yours to keep until the certificate matures, whether that is a few months or a few years from now.
The six CDs below all pay more than today's 4.2% inflation rate, helping your savings stay ahead. And with the rate guaranteed, it's easy to know exactly what your money will earn. Having a fixed term can also help you resist the temptation to dip into savings for something unplanned.
You can get more details on the six CDs below—as well as many other top offers—in our daily ranking of the best nationwide CDs.
Before opening a CD, choose your term carefully. If you need to cash out before maturity, you'll generally face an early withdrawal penalty that can eat into your interest. You may also want to split your deposit across two CDs with different terms, so not all of your money is locked up for the same length of time.
Get personalized, AI-powered answers built on 27+ years of trusted expertise.