Inflation shows signs of cooling, according to the latest Consumer Price Index report. Though prices rose by 0.1% from February to March, this increase is much smaller than previous months -- inflation rose 0.4% from January to February, for example. It was also the smallest increase we’ve seen for all indexes since March 2021.
However, prices are still higher than they were a year ago, so you may still feel a strain on your wallet. According to experts, the economic downturn isn’t over quite yet.
“With the rising odds of a recession in the near future and inflation causing higher prices today, it is even more important to have your savings in order,” said Tracy Bell, director of equity strategies at First Horizon Advisors. Bell recommends building up an emergency fund and storing it in a low-risk, interest-earning account.
CDs and high-yield savings accounts are two savings options that experts recommend most for growing your savings. Both offer higher returns than we’ve seen in recent years -- and if rates remain high, as experts predict, you may be able to earn even more in the coming months.
Here are the latest CD and savings rates and how the latest inflation report could affect deposit accounts and savings in the coming weeks.
Read more: Apple Card High-Yield Savings Accounts Are Here With a 4.15% APY Rate
The best savings rates this week
Based on accounts we track at CNET, the average high-yield savings APY rose from 4.23% to 4.39%.
UFB lowered its savings rate from 5.02% down to 4.81%. Meanwhile, Bask Bank raised its rate from 4.45% to 4.65%. Many banks kept their savings rates the same this week, including Tab Bank, Citizens Access and My Banking Direct.
| Bank | APY | Minimum deposit |
| UFB | 4.81% | $0 |
| My Banking Direct | 4.38% | $500 |
| Bask Bank | 4.65% | $0 |
| Citizens Access | 4.25% | $0 |
| Bread Savings | 4.50% | $100 |
| Tab Bank | 4.40% | $0 |
The best CD rates this week
Some CD rates for banks we track at CNET increased slightly for the week of April 17. Six-month CD rates are now around 5.00%, while longer-term CDs, three to five years, are around 3.75%. The average five-year CD APY dropped from 3.81% to 3.77%, while other terms remained about the same.
Comparatively, average CD rates are barely over 1.00% based on Federal Deposit Insurance Corporation data. The FDIC average includes rates from major national banks with lower APYs than neobanks. Keep in mind that the FDIC data is updated monthly, while CNET’s average is updated weekly.
| 6-month | 1-year | 3-year | 5-year | |
| FDIC | 0.97% | 1.49% | 1.31% | 1.35% |
| CNET | 4.07% | 4.46% | 3.75% | 3.77% |
Here are the best CD rates by term this week:
The best 6-month CD rates
| Bank | APY |
| CIT Bank | 5.00% |
| Bask Bank | 4.85% |
| Alliant Credit Union | 4.75% |
The best 1-year CD rates
| Bank | APY |
| CFG Bank | 5.20% |
| Bread Savings | 5.05% |
| Alliant Credit Union | 5.00% |
The best 3-year CD rates
| Bank | APY |
| CFG Bank | 4.60% |
| Bread Savings | 4.50% |
| MYSB Direct | 4.50% |
How the latest CPI report will affect savings and CD rates
The latest report was an encouraging sign that inflation is improving, says Tom Graff, certified financial planner and head of investing strategy at Facet.
“While Core CPI at +0.4% is certainly well above the Fed’s target, many feared this report could come out high enough to effectively force a Fed hike in May,” said Graff. (Core inflation refers to all items tracked by the CPI, excluding food and energy, since these categories are more volatile than others.) “We do not believe +0.4% forces the Fed to do anything,” Graff added.
Instead, he said the Fed’s best move would be to pause on rate hikes in May. Inflation is slowing, and the latest unemployment report had the slowest pace of hiring in more than two years. If the Fed follows Graff’s predictions to pause raising the federal funds rate, some banks may hold savings and CD rates where they are -- instead of raising them.
This makes now a good time to open an account to earn interest. If rates remain where they are, you can get a 4.00% – 5.00% APY on your savings -- through a CD or high-yield savings account.
Keep in mind that not every bank will move alongside the Fed’s decisions or the CPI report. Instead, some banks may still raise savings account rates to attract new customers or to compete with other banks.
What the CPI report means for your wallet
Just because inflation is cooling doesn’t mean a recession isn’t still likely.
“The economy may slow too much, causing a recession or stress in the financial system that makes a potential recession more severe,” said Bell. “In those scenarios, people should expect job losses and the unemployment rate to increase.” A recession is a period of economic downturn typically marked by a higher rate of unemployment and job turnover.
But the chances of a recession are less likely now that there are signs of inflation improving, said Alvin Carlos, a chartered financial analyst and managing partner at District Capital Management.
“A recession is still possible in the next 12 months, but the likelihood is decreasing. Our economy is still creating a lot of jobs, and unemployment remains low,” he said. There’s also a chance that the Federal Reserve may impose another rate hike of 25 basis points (equivalent to a quarter of a percentage point) at the Federal Open Market Committee meeting on May 2-3.
Regardless of the chances of a deep decline, it’s still best to prepare for emergencies in any economic environment. Bell recommends keeping six to nine months saved in an emergency fund. The recommendation for how much to keep in your emergency savings varies by expert, but the savings can be the safety net to keep you afloat in case of a job loss or costly emergency.
Bell advised trying to keep savings as a part of your monthly budget. “It can take time to build the needed balance, but it’s so important to start,” said Bell. “You don’t want to be forced to dip into your retirement funds or take on credit card debt to pay monthly bills or buy groceries.”
If you come across a windfall of money from a tax refund or work bonus, move as much as you can into your savings. Another way to add more to your emergency fund is to sell items you no longer need. More importantly, the money should go into a low-risk account, said Bell. A high-yield savings account can pay a competitive APY without exposing your money to market volatility.
For example, if you deposit $100 into a high-yield savings account with a 4.00% APY and you contribute $50 each month for three months -- assuming the APY remains the same -- you’ll have $251.48 after three months. Even though the $1.48 in interest may not seem like much, the better rates get, and the more you deposit regularly, the more interest you’ll earn on your savings.
If you don’t need the funds right away, you can earn even more interest by building a CD ladder.
FAQs
A CD works best as a secondary savings vehicle and not your primary emergency savings option. If you need the money for an emergency, you won’t be able to access it as easily with a CD as other savings options -- like a high-yield savings or money market account. While you can access your CD funds early if needed, you’ll likely have to pay an early withdrawal fee that can cut into your interest.
CDs and savings accounts are safe if the FDIC or National Credit Union Administration insures them. Deposits are usually covered up to $250,000 per person, per account.
Based on the banks we track at CNET, the average high-yield savings rate is 4.39%. However, some banks are well over our average rate.
Our research shows that a solid 6-month CD rate is 4.07% and 4.46% for a one-year CD. Since rates continue to rise, experts recommend sticking to short-term CDs, which are one year or less.
