Savings yields have nudged lower in recent months as the Federal Reserve closed out 2025 by making three straight quarter-point cuts to its benchmark interest rate. Savers face a shifting interest-rate environment that can impact savings accounts, certificates of deposit and other financial products, but they can still find the best rates from high-yield savings accounts and CDs. See how you can keep your savings ahead of inflation and boost your earnings.
[Read: Best Savings Accounts.]
What Does the Current Rate Environment Mean for Savers?
The annual percentage yield on your savings account may decrease now that the Fed has lowered interest rates. Signs indicate the Fed may make at least one cut in 2026, although mixed economic signals and the upcoming appointment of a new Fed chair add uncertainty to the direction of future rates. If cuts take place, it could pull savings interest rates down closer to the current inflation rate of 2.7%.
How Rate Changes Impact Your Savings
The federal funds rate is essentially the interest rate banks charge each other for overnight loans. It acts as a benchmark for the rates offered to customers. When the Fed changes the federal funds rate, it influences rates on financial products such as mortgages, personal loans, CDs and savings accounts.
After holding rates steady for much of 2025, the Fed began making cuts in September. When the Fed cuts rates,average savings rates typically follow the trend. However, that movement has been relatively minimal during the most recent cuts, with the national deposit rate for savings dropping from 0.40% in September to 0.39% in December. The average one-year CD rate fell from 1.70% to 1.63% during that time.
The Savings Landscape in 2026
The three cuts in late 2025 put the federal funds target rate range between 3.50% and 3.75%, and the Fed is generally expected to shave its rate further in 2026.
If you’re opening a new CD or checking the APY on a savings account, expect the rate to be lower than offers you may have seen earlier this year, before the rate cut. Cutting the fed funds rate typically leads to lower rates across bank products, stimulating the economy by reducing the cost of loans but lowering returns for savers.
High-Yield Savings Accounts and CDs Are Still Strong Options
When rates drop, you can miss out on interest earnings if you’re not seeking the best place for your money and adopting strategies to maximize your returns. CD laddering, shopping for high-yield accounts and choosing accounts that still earn well in a low-rate environment can keep your savings growing.
“Online banks and credit unions remain the best options for competitive high-yield savings accounts,” says Jamie Strayer, creator and executive producer of “Opportunity Knocks” on PBS, a show about personal finance and economic mobility. “With inflation exceeding the Federal Reserve’s target, savers should aim for returns that outpace current inflation rates.”
Although short-term CDs have generally been offering higher rates over the past two years, now may be a good time to shift your strategy and lock in some longer-term CDs, especially if you believe the Fed isn’t done cutting rates, says Peter Phillips, chief investment officer at Washington Trust Wealth Management.
“If you can get a nice three-to-five-year CD with competitive yields above where the fed funds rate is right now, that seems like a great bet,” says Phillips.
[Read: Best CD Rates.]
Maximizing Returns With CD Laddering
CD laddering can give you flexibility as interest rates change. With a CD ladder, you open multiple CDs with different maturity dates. With CDs maturing at varying intervals, you can choose the best investment for your funds as they become available. You can reinvest at potentially higher rates if the environment improves or keep some of your funds locked into a strong rate before they fall further.
A CD ladder also becomes a more lucrative strategy when longer-term CDs are paying higher yields than short-term CDs, says David Tuyo, president and CEO of Peak Credit Union.
He gives the example of building a CD ladder with terms of six months, one year, 18 months, and two years. When your initial six-month CD matures, you roll that balance into a two-year CD to keep the ladder maturing at six-month intervals. This allows you to access your funds every six months, while earning the two-year rate, which historically pays a higher yield.
“It’s a really great way to enjoy your life and get peace of mind and not worry about what the Fed’s doing,” says Tuyo.
High-Yield Savings Accounts Remain Competitive
High-yield savings accounts offer the most competitive savings rates. Usually offered by online banks or credit unions, these accounts provide better yields because they have lower overhead costs than traditional banks. If you have a savings account with a traditional bank, compare the APY to that of a high-yield savings account to see if you can earn more.
Even if you have a high-yield savings account, you should still shop around to confirm whether your bank has the best rates, and be ready to move your funds if you can find an account that earns more.
“Regardless of whether interest rates are rising or falling, high-yield savings accounts continue to deliver the highest rates available,” says Gary Zimmerman, founder and CEO of MaxMyInterest. “Depositors get the benefit of FDIC insurance, same-day liquidity, and rates that competitively respond to the current market environment.”
[See: Best High-Yield Savings Accounts: Up to 4.57% APY]
Zimmerman recommends opening multiple high-yield savings accounts and shifting funds to where rates remain highest. “To ensure you’re keeping pace with inflation, it’s not good enough to open a single high-yield savings account,” he says.
Bonds Could Be a Strong Alternative
For those looking beyond traditional bank savings products, the current rate and economic environment may present a good opportunity to invest in corporate or government bonds, says Phillips. He says bond yields remain competitive, and the value of those bonds could rise if interest rates fall farther in the coming months.
“Fixed income doesn’t look too bad here if you think the Fed’s going to lower rates and if you think the economy is going to slow,” says Phillips. However, he suggests focusing only on high-quality bonds.
“The extra yield you would typically get from investing in a riskier security or riskier corporate bond isn’t there,” he says. “So you’re not getting compensated for taking on the extra risk.”
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Where to Save Your Money Now That Interest Rates Are Lower originally appeared on usnews.com
Update 01/12/26: This story was previously published at an earlier date and has been updated with new information.