How a Pause on Interest Rate Cuts Can Benefit Your Savings

Financial experts say the Federal Reserve's pause in interest rate cuts could benefit savers.

Higher interest rates mean more potential savings earnings; two popular options for maximizing returns are money market accounts and certificates of deposit (CDs).

Comparing CDs and Money Market Accounts

1. Certificates of Deposit (CDs) typically offer higher fixed interest rates, currently topping out around 4.5%, according to MoneyWatch.
2. CD rates are locked in, meaning the interest rate remains the same even if rates fluctuate.
3. The downside: CDs require keeping funds untouched for a set period—often six months, nine months, or longer.
4. Money market accounts, on the other hand, offer more flexibility, but interest rates can fluctuate based on market conditions.

For those looking to grow their savings, locking in a CD rate could provide steady returns. For example, $1,200 in a CD at 4.5% interest would grow to $1,254 over a year.

Financial advisors recommend assessing liquidity needs before choosing between a CD and a money market account.