Financial Planning Tip October 2025

Have you looked at the interest rate on your savings accounts lately? If you haven’t, this is a good time to check. The Federal Reserve board just cut interest rates and banks typically change their rates in tandem. This mostly affects rates on short-term deposits like savings accounts. With inflation running at around 3%, it’s important that your savings interest rate is beating that number so inflation doesn’t eat away at the value of your cash.

Most checking accounts pay no interest, so that isn’t a good place to store excess cash. Bank savings accounts are paying next to nothing, most of them less than half a percent. Bank CDs are currently averaging around 2% for a 1-year CD. These aren’t great choices. High-yield savings accounts are paying around 3.5% interest, which is competitive. Money market funds at brokerages are offering around 4% interest. If your extra cash is sitting in an account earning less than 3%, it’s time to move to something better.