The path for interest rate cuts in 2025 is becoming cloudy, but a silver lining has emerged for savers: they can continue earning attractive yields on cash deposits. The Federal Reserve’s December meeting minutes showed that policymakers are fretting over inflation and indicated they will move slowly on rate cuts. Last month, the central bank also trimmed its outlook for rates to reflect two expected reductions in 2025, down from the four it predicted in September. Savings institutions have been preparing for a lower-rate regime, dialing back the yields they pay on deposit products. Consider that last summer, Bread Financial offered a one-year certificate of deposit with an annual percentage yield of 5.25%. Today, a new one-year CD at that bank will come with an APY of 4.1%. Just as the Fed is expected to take a slower approach to trimming rates, banks may also ease up on lowering the yields they offer going forward. “We have heard from some online banks that they intentionally preempted Fed rate cuts, implying that the December Fed cut may not drive significantly more bank deposit rate cuts until the Fed moves further,” wrote BTIG analyst Vincent Caintic in a report last week. Here’s where savers can still snag attractive yields on cash they’re socking away for an emergency or for a short-term goal. In BTIG’s coverage, Marcus by Goldman Sachs now offers the most attractive rate on one-year CDs, with an APY of 4.25%. That’s followed by the 4.1% APY offered by Bread Financial and Sallie Mae on their respective one-year CDs. The upshot of taking out a CD is that you’re locking in the yield for the term of the instrument. However, you may face reinvestment risk when it matures, meaning that you won’t be able to find similar yields elsewhere. Further, while banks can renew your CD at maturity, you might be getting a lower rate, so you’ll need to keep an eye on the date and plot your next steps. In addition, those who “break” their CDs by redeeming them ahead of time face a penalty in the form of lost interest. For savers who want to have access to their cash, there are high-yield savings accounts. LendingClub and Bread Financial offer an APY of 4.5% on these deposits. Here, the catch is that the bank can adjust its rates at any time. Still, a yield that’s more than 4% is still better than the national average yield of 0.56%, according to Bankrate . Regardless of whether you go with a high-yield savings account or a CD, the Federal Deposit Insurance Corp. backs these sums up to $250,000 per depositor, per FDIC-insured bank, per ownership category. Correction: The LendingClub high-yield saving account has an APY of 4.5%. An earlier version misstated the figure.
