Inflation is rising again — and raising the magic number your savings need to beat

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Are your savings keeping up with today’s magic number?

Inflation rose again last month, as it does today Consumer Price Index (CPI) ticking to a annual rate 3.0%.— the highest since January. Even small moves like these matter because inflation doesn’t just make groceries and gas cost more – it quietly reduces how much of everything your money can buy.

This makes the inflation rate of sorts magic number— minimum return your savings that you need to earn to avoid losing your position. If your account only earns 1% and prices increase by 3%, you are actually losing 2% of the purchasing power of your money each year.

Unfortunately, most banks will not help you plug the gap. The national average savings rate is just 0.40%, while big names like Chase, Bank of America, and Wells Fargo pay almost zero 0.01%.

But you don’t have to accept it. Accounts that have beaten the inflation rate are easy to findand transferring savings can stop the slow decline in value while helping to increase your balance.

How to stay ahead with the best high-yield savings account

One of the easiest ways to win inflation has a savings account with the highest rate of return. You’ll earn much more than at a traditional bank and still have full access to your cash when you need it.

Even though the Federal Reserve lowered interest rates in September, that’s still the case will probably make another reduction next weekIt’s still a favorable time for savers. Today best high yield savings accounts include 15 offers ranging from 4.25% to 5.00%, which will get you well over your 3% target.

As the chart below shows, the most popular high-yield savings accounts have outperformed inflation for over two and a half years, and while this trend won’t last forever, it’s likely to continue for now.

Even a solid 2% APR can’t keep up with today’s magic number of 3% – the best accounts are the only way to stay ahead.

How to use CDs to lock in against Fed cuts

You can do this by depositing money into a high-yield savings account refine your strategy With certificate of deposit (CD). CDs require you to keep your money for a certain period of time – from a few months to a few years – but they guarantee it APR throughout this period.

This protection matters now. The Fed is expected to cut interest rates twice this fall, opening one of them the most popular CDs today— while maintaining the liquidity of funds in the form of savings — can help you maintain an inflation-beating rate of return for longer.

The best nationwide CDs pay up to 4.40% on shorter terms and around 4.00% to 4.25% on longer terms – both well above the inflation benchmark.

How we find the best CD savings and rates

Every working day, Investopedia tracks rate data from more than 200 banks and credit unions that offer CDs and savings accounts to customers across the country and establishes daily rankings of the highest-paying accounts. To qualify for our lists, an institution must be federally insured (FDIC for banks, NCUA in the case of cooperative savings and credit unions), and the minimum initial deposit in the account cannot exceed USD 25,000. Nor can he determine maximum deposit amount less than USD 5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to make a donation to a specific charity or association in order to become a member, unless you meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain job), we exclude credit unions whose required donation is $40 or more. To learn more about how we choose the best rates, read our full methodology.