Until recently, the main cause of the disconnect was low interest rates. During the same period, inflation averaged about 2%. From 2000 through 2022, the average one-year CD yielded 1.46%. You don’t expect your cash to grow much in a bank account, but you don’t want it to lose too much ground either.įor the past couple of decades, however, that’s exactly what’s happened. How inflation affects your savingsĬash is supposed to be the part or your financial portfolio that you can count on to be there when you need it. In other words, savings accounts can now help you actually earn money, not just keep it safe. “Positive real yields,” are expected to continue for at least a few months,” says Ken Tumin, founder of rate tracking site DepositAccounts.
Lucky for savers, the Fed’s rate hikes have also increased what banks are willing to pay out on savings with the best accounts are now yielding more than 5%.
