Cash Yields Reach up to 5.00%-For Now

It’s always smart to make sure your money is earning all it could, as the right account could add hundreds more to your savings over time. The good news for savers is that today’s options remain strong.

the federal Reserve cut its benchmark interest rate a quarter point this week, but the top high-yield savings and money market accounts still pay up to 5.00%, while the best CD rate stands at 4.40%. Brokerage and robo-advisor cash accounts currently yield up to 4.04%, while U.S. Treasuries offer as much as 4.67%.

Compare today’s rates to see how the best safe havens for your cash stack up in a cooling rate habitat.

Here’s a snapshot of current rates (as of March 20, 2024):

* High-Yield Savings Accounts & Money Market Accounts: Up to 5.00%
* Certificates of Deposit (CDs): Up to 4.40%
* Brokerage/Robo-Advisor Cash Accounts: Up to 4.04%
* U.S. Treasuries: Up to 4.67%

This Week’s Highest-Paying Options for Savings, CDs, Brokerages, and Treasuries

For a low-risk return that’s still rewarding, today’s top cash investment options fall into three main categories:

Six Months of Earnings at Various APYs

Thes examples assume you can earn the stated annual percentage yield (APY) for the full six months, which may not be possible with variable-rate options.

Important

The rate you earn from a savings account, money market account, cash account, or money market fund is variable and will generally drop whenever the Fed cuts rates. In contrast, CDs and Treasuries allow you to lock in your yield for a set time period.

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Money Market Funds vs. Cash Management Accounts: What’s the Difference?

When you’re looking for a safe place to park your cash, you’ll likely encounter money market funds and cash management accounts. Both offer a seemingly low-risk way to earn a return, but they work quite differently. Understanding these differences is crucial to choosing the right option for your financial goals.

What are Money Market Funds?

Money market funds (MMFs) are a type of mutual fund that invests in very short-term,low-risk debt securities. Think U.S. Treasury bills, certificates of deposit (CDs), and commercial paper. they aim to maintain a stable net asset value (NAV) of $1 per share, meaning you generally won’t lose your principal. However, it’s important to remember that MMFs aren’t FDIC insured, though they are generally considered very safe.

The yield on money market funds fluctuates daily. This is because the underlying investments change, and interest rates are constantly in motion. You’ll see rates quoted as an Annual Percentage Yield (APY), which reflects the annualized return based on the current yield. Investopedia has a great overview of money market funds if you wont to dive deeper.

What are Cash Management Accounts?

Cash management accounts (CMAs) are typically offered by brokerage firms and banks. They function similarly to checking accounts but frequently enough offer higher interest rates. CMAs usually come with features like check-writing, debit cards, and bill pay, making them convenient for everyday transactions.

Unlike money market funds, rates on cash management accounts are more fixed, but they can be adjusted at any time by the financial institution. This means the APY you see today might not be the same tomorrow. CMAs are often FDIC insured, up to the standard $250,000 per depositor, per insured bank, providing an extra layer of security.

U.S. Treasury Rates

Treasury securities pay interest through maturity and can be purchased from TreasuryDirect or traded on the secondary market through a bank or brokerage. I bonds must be bought from TreasuryDirect.

Here’s a Quick Comparison:

Which One is right for You?

If you prioritize a potentially higher yield and don’t