Stashing cash in a savings account may give you peace of mind, but little else.
Although the Fed has no direct influence on deposit rates, those tend to be correlated to changes in the target federal funds rate.
Now, according to the Federal Deposit Insurance Corp., the average savings account rate is a mere 0.08%, or even less, at some of the largest retail banks.
Online-only banks such as Marcus by Goldman Sachs and CIT Bank still offer higher returns, thanks in part to lower overhead expenses than traditional banks. However, those rates are falling, as well.
What was closer to 2% is now close to 1.5%, according to according to Ken Tumin, the founder of DepositAccounts.com. The rates on these savings accounts are variable, after all, "and within two weeks that might be even lower," he said.
"Online-only banks usually pay out higher yields and interest rates, and might be worth looking into," said Sean Stein Smith, CPA and member of the American Institute of CPAs' financial literacy commission.
In addition, "locking in rates with a longer-term CD might give an extra 1% or even 2% than you otherwise might earn," he added.
For now, top-yielding CD rates are averaging just under 2% — slightly better than a high-yield savings account.
The CDs that offer the highest yields typically have higher minimum deposit requirements versus an online savings account and require longer periods to maturity. That means that money isn't as accessible as it is in a savings account.
However, not all CDs penalize you for withdrawing money before the CD matures.
About half a dozen online banks are offering so-called no-penalty CDs, according to Tumin.
For example, Marcus has a seven-month, no-penalty CD with an annual percentage yield, or APY, of 1.7%, the same as it pays on a savings account.
Further, some banks, including Marcus and Citi, are now allowing customers impacted by coronavirus to break certificates of deposit early and are waiving fees.