Summary<\/p>\n
The Fed opted not to raise rates despite elevated inflation but nine officials signaled support for at least one hike this year.
\n With inflation at double the Fed’s 2% target, Americans face higher costs on everything from groceries to housing.
\n High-yield savings accounts now offer around 4% while mortgage rates hover near 6.5%, experts say.<\/p>\n
\n AI-generated summary was reviewed by a CNN editor.<\/p>\n
\n The Federal Reserve may have a new chairman in Kevin Warsh, but it still has to balance its old dual mandate: Lower rates to boost the economy when the labor market is struggling, or raise rates to cool economic activity when inflation is considered too high.\n <\/p>\n
\n Well, the job market seems to be doing better than expected<\/a>. But inflation is now at its highest level (4.2%) in three years<\/a> \u2014 and double the Fed\u2019s oft-stated target of 2%.\n <\/p>\n \n Nevertheless, the Federal Reserve on Wednesday opted not to raise rates<\/a>. But nine Fed officials penciled in at least one rate hike<\/a> this year.\n <\/p>\n \n Whether that actually happens remains to be seen. But in the meantime, you can take steps now to improve what you earn on your savings and pay on your debts.\n <\/p>\n \n The average bank savings yield was just 0.61% as of mid-June, according to Bankrate. You\u2019ll do much better putting your money in one of the options below, although for the first time in a few years it will be harder to find rates that handily beat inflation.\n <\/p>\n \n You\u2019re more likely to see yields on par with or slightly below the latest inflation reading. Nevertheless, they still can do a lot to limit inflation\u2019s damage.\n <\/p>\n \n Online high-yield savings accounts: For savings you need easily accessible, you\u2019ll get the best variable rates in FDIC-insured online high-yield savings accounts.\n <\/p>\n \n The best rates on offer this month are around 4%, according to Bankrate.\n <\/p>\n \n A handful of banks offer even more. The top four highest-yielding accounts that Ken Tumin, cofounder of DepositQuest, found had rates between 4.21% and 4.40% as of Monday. But rates at the biggest banks ranged from 3% to 3.4%.\n <\/p>\n \n Certificates of deposit: If you\u2019re willing to lock up your savings for a fixed period of time, a bank-issued FDIC-insured CD offers guaranteed growth at a fixed rate.\n <\/p>\n \n Currently, the best rates on CDs that you buy direct from a bank are around 4%, per Bankrate.\n <\/p>\n \n You also can buy one through your brokerage, which will offer CDs from banks around the country. For instance, on Schwab.com, annual average rates for CDs ranging in durations from three months to three years were between 4.0% and 4.40% on Wednesday morning.\n <\/p>\n \n To maximize the interest you earn, don\u2019t withdraw money until the CD matures. Before buying a CD directly from a bank, know what the early withdrawal penalty is. If you buy a brokered CD, instead of an early withdrawal penalty, you risk losing some of your principal if you have to sell it before it matures for less than you paid in the open market.\n <\/p>\n \n You will owe federal, state and local income taxes on any CD interest you earn.\n <\/p>\n \n US Treasuries: Treasury bills (which mature in 1 year or less) and notes (which mature in two to 10 years) offer a solid return on cash you might need to tap within the next few years. Average yields on Treasuries ranging in duration from three months to 10 years offered on Schwab.com were between 3.74% and 4.43% on Wednesday morning.\n <\/p>\n \n With Treasuries, the interest income you earn is exempt from state and local taxes.\n <\/p>\n \n Inflation-protected securities: If inflation is your top concern, a Savings I-Bond<\/a> or a Treasury Inflation-Protected Security (TIPS)<\/a> might help. The structure and rules for each are different. But both can help preserve your money\u2019s purchasing power.\n <\/p>\n \n \u201cFor savings that may be needed within the next year or two, high-yield savings accounts, money market funds and short-term Treasuries remain more appropriate because they provide greater liquidity and stability,\u201d said certified financial planner Sue Gardiner of South County Wealth Planning.\n <\/p>\n \n But, Gardiner added, \u201cTIPS and I-Bonds can be useful for a portion of longer-term savings.\u201d\n <\/p>\n \n Money market funds: These funds offer a one-stop option to make sure your savings are always earning more than a traditional bank account.\n <\/p>\n \n Your money won\u2019t be insured by the FDIC as a bank account is. But money market funds are considered safe since they invest in very short-term debt like US Treasuries and high quality short-term corporate debt.\n <\/p>\n \n Such funds typically do not outpace inflation \u2013 although in the past few years they have, per Morningstar.\n <\/p>\n \n As of Tuesday, the average 7-day yield on money market funds was 3.45%, per Crane Data.\n <\/p>\n \n Unless and until the Fed embarks on a drastic rate-cutting campaign, it is up to you to find ways to minimize the interest you pay on your debts.\n <\/p>\n \n Your credit cards: The average credit card rate is punitive \u2013 19.56% as of June 10, according to Bankrate.\n <\/p>\n \n Your best bet if you can\u2019t pay off your balance in full: See if you qualify for a balance transfer card to get up to 21 months to pay what you owe interest-free. If you can\u2019t, see if you can get a good rate on a personal loan. The average rate on personal loans was 12.28% as of June 10, but those with great credit scores might get a rate as low as 6.2%, per Bankrate.\n <\/p>\n \n Don\u2019t qualify for either option? Make every effort to pay far more than the monthly minimum required. Otherwise, you could pay an obscene amount in interest relative to your original balance. (See for yourself using this Bankrate minimum payment calculator<\/a>.)\n <\/p>\n