There’s a lot of debate right now about when the Federal Reserve will cut interest rates. If the central bank does cut interest rates soon, is now a good time to open a CD or savings account?
Here’s the thing: whether or not the Fed cuts interest rates, you might be losing hundreds of dollars right now — by keeping your cash in the wrong bank’s savings account.
Let’s look at a few reasons why you should stop losing money and move your cash to a high-yield savings account — even if APYs come down soon.
Big banks are still paying tiny APYs
Some of America’s biggest banks offer some of the smallest yields on savings accounts. For example, a typical savings account from some big-name banks might only pay 0.01% APY. That means if you have $10,000 in the bank, after one year, you’d earn…$1. That’s right: one entire dollar!
Our Picks for the Best High-Yield Savings Accounts of 2024
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American Express® High Yield Savings 
APY 4.25%
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APY 4.25%
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Min. to earn $1 |
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Western Alliance Bank High-Yield Savings Premier 
APY 5.31%
Min. to earn $500 to open, $0.01 for max APY
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APY 5.31%
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Min. to earn $500 to open, $0.01 for max APY |
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UFB Secure Savings Account 
APY 5.25%
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APY 5.25%
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Min. to earn $0 |
The national average savings account isn’t much better. Currently, the national average savings account rate is only 0.45%. That means a $10,000 savings account balance would only earn $45 in a year — or about $3.75 per month.
Meanwhile, the best savings accounts are offering APYs of 5.00% or more. With a 5.00% APY savings account and $10,000 deposited in the bank, you’d earn $500 in one year. In other words, you could be missing out on hundreds of dollars just by keeping your cash with the wrong bank.
Possible Fed rate cuts won’t destroy your savings account APY
Some people might not want to open a new savings account right now because the Fed is expected to cut interest rates soon rather than later. When interest rates decline, savings account APYs typically go down too. But the Fed might only cut interest rates by 25 basis points (0.25%). The Fed could keep cutting, and slash interest rates even lower in 2025, but there’s no guarantee of this happening.
What if the Fed cuts interest rates by 25 basis points, and leaves them at that level for several months? The best savings accounts might still offer APYs of around 5.00% — or even 4.75% APY. That would still deliver yields of $475-$500 per year on $10,000 of savings.
How much money you’re losing: Best vs. worst savings accounts
Want to see how different savings account APYs affect your cash? Here are a few examples of how much your money can grow (or not) based on whether you keep it in one of the best savings accounts, an average savings account, or the lowest-yielding savings account.
We crunched the numbers to see how much yield you’d earn in one year from each of these savings account APYs.
| Account balance |
Worst savings account (0.01% APY) |
Average savings account (0.45% APY) |
Best savings account (as of July 2024) (5.00% APY) |
Best savings account after possible 0.25% Fed rate cut (4.75% APY) |
|---|---|---|---|---|
| $1,000 | $0.10 | $4.50 | $50 | $47.50 |
| $5,000 | $0.50 | $22.50 | $250 | $237.50 |
| $10,000 | $1 | $45 | $500 | $475 |
| $20,000 | $2 | $90 | $1,000 | $950 |
Data source: Author’s calculations
Based on the amount of your savings account balance, you could be losing $200-$1,000 per year (or more) by keeping your savings in a near-zero interest bank account. And even if the Fed cuts interest rates soon, the best savings accounts are still likely to pay high enough yields to be worth switching banks.
Bottom line
The worst savings accounts (with 0.01% APY) are costing you money — by forcing your savings to go without yield. You don’t have to put up with this. The best savings accounts offer 5.00% APY or more.
And don’t assume that possible Fed rate cuts mean you have to abandon your savings to a near-zero APY bank account. Even if the Fed cuts interest rates in 2024, you will still likely be able to earn an attractive yield on your cash savings with the best savings accounts and money market accounts.
These savings accounts are FDIC insured and could earn you 14x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 14x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.