3 savings moves to make before the next inflation report

Inflation has increased so far in 2024. Although Inflation rate of 3.1% in January was lower than December rate of 3.4%, was higher than economists expected. And in February and March, price growth began to accelerate in the United States, with inflation rates in those months 3.2% i 3.5%respectively.

But, that can be good news for savvy savers. After all, inflation and interest rates tend to rise at the same time. Thus, interest rates and, in turn, earnings in many deposit accountsthey are high at the moment. And, if inflation continues to rise, the Federal Reserve could raise its federal funds rate, which could push up consumer interest rates. Then, if inflation starts to cool, the Fed could cut rates. This could lead to a reduction in the earnings of the deposit accounts.

With this uncertainty in the air, you may be lost what to do with your savings before the next inflation report. Find a few smart savings moves you should before the April inflation data is released below.

Compare today's top high yield savings accounts now!

3 savings moves to make before the next inflation report

Here are three smart savings moves you should make before the next inflation report comes out on May 15.

Open a CD

A certificate of deposit (CD) gives you the ability to block yourself today's high yields throughout the life of the account. “CDs are a good option if you have a chunk of money that you won't need to access right away,” says Brian Kelly, senior vice president and director of the retail market at Rockland Trust Bank. “They generate a fixed interest rate that is typically higher than a traditional savings account.”

This is important with inflation uncertainty in the air. After all, if April's inflation data shows a cooling from March's high inflation rate, it could be a sign that the Fed could cut its federal funds rate target ahead of time. As such, financial institutions may begin lowering their CDs and savings account APYs in anticipation of a potential Fed rate cut.

But if you open your CD before the next inflation report, you can be sure that regardless of the state of inflation, you'll get a significant return on your money over the life of the account.

Compare today's top CD accounts now.

Open a high-yield savings account

High yield savings accounts Come with variable interest rates which can change as the federal funds rate rises and falls. But this gives you a chance to hedge your CD bets before the next inflation report.

After all, if this report shows continued inflation growth, it could be a sign that the Fed may raise interest rates ahead. If your savings are tied up in a CD, you won't be able to take advantage of these potentially higher returns.

Therefore, it may be wise to open a high-yield savings account and split your savings between it and a CD. By doing so, your fixed-rate CD will protect your income from your savings if inflation cools and rates fall, while your high-yield savings account can produce income growth if inflation continues increasing and rates increase.

Transfer money from non-earning accounts

It doesn't matter if you open a CDa high yield savings account or both, it's important that you take advantage of today's high interest rates as prices continue to rise. Many of today's traditional savings accounts fail to keep up with inflation (earning only an average of 0.46% per year). Leaving your money in these accounts will result in a loss of purchasing power as prices grow at a faster rate than your savings.

But, it is easy to avoid this scenario. Take your money out of any account you have that is earning nothing, or little or nothing. Then deposit that money into a CD or high yield savings account with a return that beats inflation to increase the power of your savings instead of losing them.

Open a high-yield savings account today to get a meaningful return on your savings.

The bottom line

In today's inflationary environment, it is important to make wise savings decisions. After all, leaving money in accounts that produce little or no income will only make your money less effective. Plus, with the inflation report right around the corner, now may be the time to act.

consider by spreading your savings between a CD and a high-yield savings account today. By doing so, you'll lock in today's high rates with a portion of your money, while allowing the rest to take advantage of higher rates in the future (should those higher rates materialize). In either case, spreading your funds between major CDs and high-yield savings accounts could mean your savings produce an inflation-adjusted return instead of a loss.