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3 savings moves to make before the next inflation report
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Inflation has run hot thus far in 2024. Although January’s 3.1% inflation rate was lower than December’s 3.4% rate, it was higher than economists expected. And, in February and March, price growth started to speed up across the United States – with inflation rates in those months coming in at 3.2% and 3.5%, respectively.
But, that may be good news for savvy savers. After all, inflation and interest rates usually increase at the same time. So, interest rates, and in turn, earnings on many deposit accounts, are high at the moment. And, if inflation continues ticking up, the Federal Reserve could push its federal funds rate higher – which could drive consumer interest rates up. Then again, if inflation begins to cool, the Fed could cut rates. That could lead to lower earnings on deposit accounts ahead.
With this uncertainty in the air, you may be at a loss for what you should do with your savings ahead of the coming inflation report. Find a few smart savings moves you should make ahead of the release of April’s inflation data below.
Compare today’s leading high-yield savings accounts now!
3 savings moves to make before the next inflation report
Here are three smart savings moves you should make before the next inflation report is released on May 15.
Open a CD
A certificate of deposit (CD) gives you the ability to lock in today’s high returns for the entire life of the account. “CDs are a good option if you have a chunk of money that you won’t need access to right away,” explains Brian Kelly, senior vice president and retail market manager at Rockland Trust Bank. “They generate a fixed interest rate that is typically higher than a traditional savings account.”
That’s important with inflation uncertainty in the air. After all, if April’s inflation data shows cooling from March’s high inflation rate, it could be a signal that the Fed may cut its target federal funds rate ahead. As such, financial institutions may start to reduce their CD and savings account APYs in anticipation of a potential Fed rate cut.
But, if you open your CD before the next inflation report, you can rest assured that, regardless of the state of inflation, you’ll earn a meaningful return on your money for the entire term of the account.
Compare today’s leading CD accounts now.
Open a high-yield savings account
High-yield savings accounts come with variable interest rates that may change as the federal funds rate rises and falls. But that offers you an opportunity to hedge your CD bets ahead of the next inflation report.
After all, if that report shows continued growth in inflation, it could be a signal that the Fed may increase interest rates ahead. If your savings is tied up in a CD, you won’t be able to take advantage of those potentially higher returns.
So, it may be wise to open a high-yield savings account and spread your savings between it and a CD. In doing so, your fixed rate CD will protect your earnings on your savings if inflation cools and rates fall while your high-yield savings account can produce earnings growth if inflation continues to come in hot and rates rise.
Transfer money out of accounts that earn nothing
No matter whether you open a CD, a high-yield savings account or both, it’s important that you take advantage of today’s high interest rates as prices continue to rise. Many of today’s traditional savings accounts fail to keep up with inflation (only earning an average 0.46% per year). Leaving your money in these accounts will lead to a loss of buying power as prices grow at a faster rate than your savings.
But, it’s easy to avoid that scenario. Pull your money out of any account you have that’s earning nothing, or little to nothing. Then, deposit that money into a CD or high-yield savings account with a return that outpaces inflation to grow the power of your savings rather than lose it.
Open a high-yield savings account today to earn a meaningful return on your savings.
The bottom line
In today’s inflationary environment, it’s important to make wise savings decisions. After all, leaving money in accounts that produce little-to-no earnings will only result in your money being less effective. Moreover, with the inflation report just around the corner, now may be the time to act.
Consider spreading your savings across a CD and high-yield savings account today. In doing so, you’ll lock in today’s high rates with a portion of your money while making it possible to take advantage of higher rates in the future on the rest of it (should those higher rates materialize). In either case, spreading your funds across leading CDs and high-yield savings accounts could mean that your savings produces an inflation-adjusted return rather than a loss.
The following is a transcript of an interview with Sen. Mark Kelly, Democrat of Arizona, on “Face the Nation with Margaret Brennan” that aired on Oct. 6, 2024.
MARGARET BRENNAN: Joining us now is Arizona’s Democratic Senator, Mark Kelly. He’s in Detroit this morning on the campaign trail for the Harris campaign. Good morning to you, Senator.
SEN. MARK KELLY: Good morning, Margaret.
MARGARET BRENNAN: I want to talk to you about Arizona, but let’s start in Michigan, which is where you are right now. And it is going to be such a key state to a potential Harris or Trump victory. Vice President Harris is facing challenges among black men, working class people, as well as the Muslim and Arab populations skeptical of the White House support for Israel’s wars. What are you hearing on the ground there from voters?
SEN. KELLY: Well, my wife, Gabby Giffords, and I have been out here for a couple days. We’ve been campaigning across the country, Michigan, I’ve been in North Carolina, Georgia as well. I’ll be back to Arizona here soon. The vice president was out here speaking to Muslim organizations and the Arab community about what is at stake in this election and addressing the concerns that they have. What we’re hearing, issues about the economy, about gun violence, about, you know, supporting American families and the difference between Donald Trump and Kamala Harris. You know, Kamala Harris, who has a vision for the future of this country, Donald Trump, who just wants to drag us backwards.
MARGARET BRENNAN: Today in Dearborn, Michigan, there’s a funeral service for an American man who was killed in Lebanon by an Israeli airstrike. It just underscores how that community you’re talking about out in Michigan feel some of what’s happening in a personal way to their community. Given how close this race is, do you think this war and the expectation it could escalate could cost Democrats both a seat in the Senate and potentially the presidency?
SEN. KELLY: Margaret, nobody wants to see escalation and it’s tragic when any innocent person, whether it’s an American or Palestinian, lose their life in a conflict. Tomorrow’s one year since October 7th, when Israel was violently attacked. Israel has a right to defend itself, not only from Hamas, but from Hezbollah and from the Iranians. But, you know, I and my wife, you know, we feel for the community here who’s been affected by this. And that’s why the vice president was out here earlier, a few days ago, meeting with that community.
MARGARET BRENNAN: But it’s a live issue.
SEN. KELLY: Yeah, sure. I mean, there is an ongoing conflict in the Middle East. Israel is, you know, fighting a war now on, I think it’s fair to say, two fronts and then being attacked by the Iranians as well. And, they- they need to defend themselves, and we need to support our Israeli ally. At the same time, when women and children lose their life, innocent people in a conflict, it is- it is tragic.
MARGARET BRENNAN: You do sit on the Senate Intelligence Committee and so I know you know how intense the efforts are by foreign actors to try to manipulate voters going into November. Just this Friday, Matthew Olsen, the lead on election threats at the Department of Justice, told CBS the Russians are, quote, highlighting immigration as a wedge issue. That is such a key issue in Arizona. Are you seeing targeted information operations really focusing in on Arizonans right now?
SEN. KELLY: Not only in Arizona, in other battleground states. It’s the Russians, the Chinese, the Iranians, and it’s significant. And we need to do a better job getting the message out to the American people that there is a huge amount of misinformation. If you’re looking at stuff on Twitter, on TikTok, on Facebook, on Instagram, and it’s political in nature, and you may- might think that that person responding to that political article or who made that meme up is an American. It could be- it could look like a U.S. service member. There is a very reasonable chance I would put it in the 20 to 30% range, that the content you are seeing, the comments you are seeing, are coming from one of those three countries: Russia, Iran, China. We had a hearing recently, with the FBI director, the DNI, and the head of the National Security Agency. And we talked about this. And we talked about getting the word out. And it’s up to us, so thank you for asking me the question, because it’s up to us, the people who serve in Congress and the White House to get the information out there, that there is a tremendous amount of misinformation in this election, and it’s not going to stop on November 5th.
MARGARET BRENNAN: Understood. And we will do our best to help parse that for viewers. But on the topic of the border, President Biden did announce just this past week new regulations to keep in place that partial asylum ban that he rolled out back in June. That’s what’s credited with helping to bring down some of the border crossing numbers in recent weeks. It was supposed to be a temporary policy, dependent on how many people were crossing at a time. Do you think this is the right long term policy, or is this just a gimmick to bring down numbers ahead of the election?
SEN. KELLY: Well, the right long term policy is to do this through legislation. And we were a day or two away from doing that, passing strong border security legislation supported by the vice president, negotiated by the vice president, and the president and his Department of Homeland Security, with Democrats and Republicans–
MARGARET BRENNAN: But this is not legislation.
SEN. KELLY: –This is bipartisan. This isn’t. But the legislation was killed by Donald Trump. We were really close to getting it passed. That’s the correct way to do this. When you can’t do that, Margaret, when a former president interrupts the legislative process the way he did, which is the most hypocritical thing I’ve ever seen in my three and a half years in the Senate. After that happened, the only other option is executive actions. And this has gone from what was chaos and a crisis at our southern border to somewhat manageable. And if you’re the border- Border Patrol, you know, this is this- you need this. I mean, otherwise it is unsafe for Border Patrol agents, for CBP officers, for migrants, for communities in southern Arizona. So it’s unfortunate that this was the- these were the steps that had to be taken.
MARGARET BRENNAN: Okay.
SEN. KELLY: But that’s because the former president didn’t allow us to do this through legislation.
MARGARET BRENNAN: Senator, we have to leave it right there. Face the Nation will be right back.
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Sen. Mark Kelly says Americans need to know about “huge amount of misinformation” on election
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