With further interest rate cuts possible, it could be a good time to lock in current interest rates in your savings if you haven't already done so.
The Federal Reserve cut its key interest rate by a quarter point in September, marking the first time it has cut interest rates this year. The Fed could make another rate cut at its meeting next week – and perhaps another at its final meeting of the year in early December – as officials try to balance inflation concerns with signs of a slowdown in the labor market.
That suggests interest rates on deposit accounts could also fall, as they tend to align with the Fed's key interest rate – although other factors, such as competition for customer deposits, can also influence interest rates at different banks.
In general, interest rates on deposit accounts have declined since last year, when it was easy for government-insured, high-yield savings accounts and certificates of deposit to earn interest rates of 5 percent or more.
Traditional brick-and-mortar banks continue to pay paltry interest rates as they have for years; According to the Federal Deposit Insurance Corporation, the average overall interest rate on savings accounts is just 0.40 percent.
However, with banks that operate primarily online, it is still possible to earn around 4 percent or more. That means your money will outpace inflation, which was 2.9 percent in August. (Federal inflation data for September is expected to be released on Friday – later than usual due to the government shutdown.)
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