As inflation cools, is a high-yield savings account still valuable? Here's what experts think

Inflation is cooling, which means that there's a chance that interest rates could come down soon. After all, the Federal Reserve may cut its target federal funds rate, which is the benchmark rate that consumer interest rates are based on, as price growth slows. And, if that happens, the rates being offered on savings accounts, certificates of deposit (CDs) and other deposit accounts could fall. 

Chances are, though, that you want to earn the biggest return possible on your savings. And, since high-yield savings accounts typically come with variable interest rates that can change based on the Fed rate, you may be wondering whether or not these accounts are still valuable. Here's what the experts have to say on the subject.

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As inflation cools, is a high-yield savings account still valuable? Here's what experts think

Inflation may be cooling but prices are still up, and the inflation rate is still higher than the Fed's 2% target rate. In turn, high-yield savings accounts may continue to offer strong returns, at least for now. 

"Inflation may be cooling year over year; however, prices are still 20%-30% higher than they were 2-3 years ago," says Aaron Cirksena, founder and CEO of MDRN Capital, a financial planning firm. "The Fed seems committed to keeping interest rates higher in the short term which means high-yield savings accounts are still a valuable tool."

Strong returns aren't the only reason to consider high-yield savings accounts, though. Liquidity is another benefit that you get from this type of account that you may not get from other savings options. With a high-yield savings account, you won't need to lock your money up for a certain term or sell an investment to access cash. 

"In my opinion, an account that is both liquid and provides a reasonable yield has its place within one's financial plan," says John Jones, investment advisor representative at Heritage Financial, a financial planning firm. "Whether you have a comfort fund, emergency fund, or significant planned expenses, many have a 'Now Bucket' that is invested conservatively and readily accessible when needed so that we can manage expected and unexpected financial situations."

If you opt for a high-yield savings account, though, it's important to ensure you can meet the requirements to earn the advertised APY. 

"The key is to understand the requirements and restrictions high-yield savings accounts offer," explains Krisstin Petersmarck, investment advisor representative at Bridgeriver Advisors, a financial advisory firm. "If you can meet them, then take advantage of the opportunity to make extra money on your savings."

And, high-yield savings accounts are safe as long as you follow a couple of simple rules. One is to opt for an account that's either FDIC- or NCUA-insured. Also, be sure the account balance is below the coverage cap, which is typically $250,000 per depositor, per account.

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Top high-yield savings accounts to consider right now

With high-yield savings accounts remaining a good option as inflation cools, you may be wondering what some of the top rates are right now. While the average savings account rate is just 0.45% currently — which includes both regular and high-yield savings account rates — many of the leading high-yield savings accounts offer rates that are over 10 times as high.

For example, the rates on many of the top high-yield savings accounts range from about 5.00% to 5.30% currently. And, while many have minimum opening deposit requirements, some start at just $0.01, meaning that as long as there's money in the account, you'll earn interest on the balance.  

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The bottom line

Inflation is cooling — and interest rates could follow at some point in the future. However, high-yield savings accounts are still worthwhile for many savers. The yields on these accounts are still impressive, and when you combine those yields with the other benefits they offer, these accounts can have a place in a well-rounded financial plan. But, you should compare your options to make sure you're getting the highest rate possible on the account that works best for you. Compare leading accounts now.