Why you should open a high-yield savings account this October
Your financial health can be affected by a multitude of factors. But the timing of your financial decisions is one of the most important. If you get started too early with a financial product or service, you may not benefit as much as if you waited later. But, if you hesitate for too long, you could miss out on your window of opportunity. The timing has to be just right.
And, lately, the timing for many Americans has been poor. Persistent inflation and decades-high interest rates have left many with higher borrowing costs and limited ways to grow and protect their savings. Returns on savings vehicles like high-yield savings and certificates of deposit (CD) accounts, however, are higher than they've been in years, making them a great option. But the timing here is also important. Fortunately, the timing for high-yield savings accounts in October 2023 could be beneficial for many.
Why you should open a high-yield savings account this October
To understand why October 2023 is a great time to open a high-yield savings account, you should first understand how high-yield savings account interest accrues. While high-yield savings accounts work just like regular savings accounts (albeit at that higher interest rate), the interest rate is variable. That means that it will change on a daily basis and the account won't be locked in with the same earning potential that a CD term would, for example.
High-yield savings account interest rates are currently in the 4.50% to 5.25% range. If you shop around, you can potentially find a rate that's even higher (particularly if you open an account online). Rates on these accounts are largely affected by what the Federal Reserve does.
And with another Fed meeting on the calendar for October 31 and November 1, another interest rate hike is possible, if not likely. So by opening a high-yield savings account at the beginning of the month, you'll be best positioned to earn that elevated rate now and the potentially even higher one after the Fed makes its rate announcement on November 1.
The time to open a high-yield savings account is now. Get started here today!
What about CDs?
It's also a great time to open a CD, thanks to the elevated rate environment. Rates on CDs are approaching 6% currently. But if you think the potential for yet another rate hike is strong for November, you may want to hold off until you can take advantage of it then.
Or, you can "ladder" your CD accounts by opening one now and another in November. This will allow you to start earning interest at today's high rates while still keeping some free funds available to open another one at a presumed higher rate in the remaining months of the year.
What you shouldn't do, however, is simply leave your money in a regular savings account. The average interest rates on these accounts are a minimal 0.45% currently, meaning that you're likely losing money by not making a deposit into a different type of account.
Explore your CD account options here to learn more.
The bottom line
Timing is crucial when it comes to your money. A few years ago, during the height of the pandemic, interest rates were low and borrowing costs were minimal. But the economy has changed dramatically since, and now borrowing is expensive and returns on your savings are elevated. So time your financial decisions accordingly.
October 2023 is a great time to boost your earning potential. By opening a high-yield savings account now, not only will you immediately start earning more money, but you'll also be best positioned to earn at an even higher rate if the Fed moves rates upward in the weeks and months to come. Get started with a high-yield savings account online here!
