Tips to Take Advantage of Rising Interest Rates for Your Savings

Tips to Take Advantage of Rising Interest Rates for Your Savings
Topics Saving

Interest rates have continued to climb to levels not seen in recent years and have impacted many consumers’ financial situation and goals.

A recent WSFS study found that regional respondents said building an emergency fund (52%) is their top goal, followed by increasing savings in retirement accounts (49%).

While rising rates and inflation impacting the cost of everyday items can make it more difficult to save, those with a bit of a nest egg already built have an opportunity to grow their savings with the help of higher interest rates.

Here are tips to help take advantage of rising interest rates to grow your savings.

Money Markets and High Yield Money Markets
Money markets and high yield money markets can provide a great opportunity to earn more than a traditional savings account and also provide flexibility when you want to make a withdrawal or deposit additional funds.

The key differentiator between the two accounts is that those who have a larger nest egg built may be able to earn a greater rate of return with a high yield money market rather than a standard money market.

Speaking with your local banker can be a great way to determine which might be the best fit for your unique financial situation.

Certificates of Deposit (CDs)
Similar to money markets, CDs had been placed on the backburner by many savers in recent years as a result of low interest rates but have seen a resurgence in popularity.

CDs earn a fixed rate of interest over the length of the CD, which typically ranges from a few months to a few years. This savings tool can come in handy when you have a longer-term goal that you’re looking to save for like a new car in a few months or years and want to know how much your account will earn.

CDs tend to offer a higher interest rate than money markets in most instances, depending on the length of the term and amount deposited. The key tradeoff is that with a CD, your money is committed for the term of the CD and you will be unable to access those funds without potentially incurring a penalty.

CDs and money markets are among the types of accounts that are FDIC insured, and individuals can increase their coverage by adding additional ownership categories if they’re concerned about hitting the FDIC coverage limits.

While inflation and rising costs have certainly strained many consumers’ finances over the past year, there is an opportunity for those with a solid nest egg built already to earn more on their savings. If you have questions on which accounts may work best for your financial situation and goals, reach out to your local banker.

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