Here's Why You Need to Open a High-Yield Savings Account ASAP

There's never really a bad time to have money in the bank -- but right now is surely one of the best times. Thanks to a series of 11 federal funds rate hikes by the Federal Reserve, we're currently seeing higher interest rates on certificates of deposit (CDs), money market accounts, and savings accounts.

In fact, the current average rate for savings accounts is 0.45%. In March 2022, when the Fed started raising rates, that figure was just 0.06%.

But don't assume that opening a savings account right now means settling for just 0.45% APY on your cash -- instead, you can easily find high-yield savings accounts (HYSA) at online banks paying 10 times that or more. Here's why you should open one of these accounts sooner rather than later.

Rate cuts are coming

The clock is ticking on 4% to 5% savings account rates thanks to impending actions by the Federal Reserve. The central bank is in charge of our monetary policy, and it pushed the federal funds rate to its current high level between 2022 and 2023 as a response to sky-high inflation in the wake of the COVID-19 pandemic. The Fed's target is 2% inflation, and we were well above that.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 10, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

Thankfully, inflation has slowly come back under control, and per the last Consumer Price Index Summary report, it actually fell 0.1% over the previous year in June 2024.

This is good news, and as a result, the Federal Reserve is now seriously eyeing rate cuts beginning this fall. Once the Fed starts bringing down the federal funds rate, we will likely see corresponding drops in interest rates on credit cards, loans, and deposit bank accounts (such as savings and CDs), as the two are linked.

The APY on your high-yield savings account won't just slam back to Earth; rather, rates will drop gradually. And your rate will still surely be higher than all the big-bank savings accounts that pay just 0.01% APY. But you can kiss those 4% to 5% rates goodbye -- so now is the time to open a HYSA if you haven't already.

Why are HYSAs worth it?

Aside from those high rates, here are a few other reasons why I love high-yield savings accounts -- and you should, too:

• No fees: Since HYSAs are generally offered by online-only banks, you likely won't have to pay any fees to maintain the account. Unlike brick-and-mortar banks, online banks don't have branches, which lowers their overhead costs. They can then pass that savings on to you.
• Easy to open: You can open an online savings account in just a few minutes. You only need your personal information and to link an outside bank account to fund your new savings account.
• Excellent mobile apps: Online banks might not have branches, but they do have the latest and greatest in financial technology. You'll often find amazing mobile apps offered by these banks, so you can deposit checks, check your balance, and more from anywhere you have cell service.
• Nifty savings tools: Some banks offer neat extras in their savings accounts, such as opportunities to "round up" small amounts of cash and send it to your savings account. But my favorite HYSA feature by far is savings buckets. These let you save for separate goals in the same account -- and at the same interest rate.

There's never been a better time to jump on the high-yield savings account bandwagon. You likely just have a few months left to benefit from earning 4% to 5% on your savings -- so open an account ASAP.