Key Takeaways
- Consider investing gift money received for graduation in high-yield accounts for great returns.
- Current savings accounts and CDs offer some of the highest rates in 20 years.
- Top high-yield savings accounts provide rates up to 5.55% with flexible withdrawal options.
- Nationwide CDs are offering rates as high as 5.65% for committed savers.
- Combining a high-yield savings account with a CD can maximize earnings and maintain accessibility to some savings.
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High-Yield Savings Accounts Offer Great Returns With Ultimate Flexibility
If you’ve received cash gifts in celebration of your academic achievements and don’t need immediate access to the funds, leveraging today’s high-yield savings accounts can be highly beneficial. Current savings rates are at their peak in over two decades, presenting a golden opportunity for substantial growth potential on your gift.
Parking your gift money in a high-yield savings account not only allows it to grow significantly but also offers the flexibility to withdraw funds when necessary.
With the top nationwide savings account currently offering an impressive annual percentage yield (APY) of 5.55%, there are multiple options in our daily rankings with rates of 5.25% or higher. By securing a rate of 5.50%, here’s an overview of potential earnings based on different deposit amounts and time frames.
However, it’s essential to note that the interest rates on savings accounts are variable and not guaranteed for the future. Banks can adjust these rates at their discretion, often influenced by the federal funds rate set by the Federal Reserve, impacting the interest rates on savings accounts.
While the Federal Reserve is maintaining current interest rates, potential future adjustments could lead to lower rates on savings accounts in the upcoming years.
How You Could Earn More With a Top-Paying CD
While savings accounts are useful for earning interest on your funds, uncertainty regarding future rates makes it prudent to consider alternative options like a certificate of deposit (CD) if your financial needs allow for a longer-term investment.
CDs require a commitment to keep your deposit until maturity, typically offering higher, fixed interest rates compared to savings accounts.
By depositing your graduation gift into a CD, you can safeguard your returns against potential rate fluctuations, as the agreed-upon interest rate remains constant until the CD matures. Currently, top nationwide CDs are rivaling high-yield savings account rates, offering a secure investment choice for those seeking predictable returns.
While early withdrawal from a CD incurs penalties, which can vary in severity, the discipline fostered by this commitment can act as a safeguard against impulsive spending.
A Hybrid Strategy Could Be the Winning Choice
For many savers, a hybrid approach combining a high-yield savings account and a CD presents an optimal strategy. By diversifying your funds across these two accounts, you can benefit from the stability of a CD’s fixed returns alongside the accessibility of a high-yield savings account.
Striking a balance between the two can maximize your earnings while ensuring quick access to a portion of your savings when needed.
For in-depth insights into the best savings and CD rates, Investopedia evaluates numerous financial institutions daily, providing rankings based on their offerings’ federal insurance, accessibility, and minimum deposit requirements.
This meticulous evaluation process ensures that recommended accounts meet strict criteria, helping you make informed decisions about where to invest your hard-earned money.