One big financial mistake to avoid in today's economy

In today's inflationary environment, it often seems like consumers are losing money left and right. They're paying more for everything from groceries to gas, accruing more credit card interest and watching their investment returns decrease. And with the Fed anticipating another rate hike in September, this isn't likely to change in the near future.

The good news is there's one simple thing you can do to actually benefit from today's high rates. 

The bad news is many Americans aren't doing it.

Check out today's top savings rate here to see how much you could be earning.

One big financial mistake to avoid in today's economy

One group that benefits when interest rates are high is savers. Interest rates on deposit accounts are based on the federal funds rate, so high rates equate to greater earnings. That's welcome news at a time when your dollars seem to be dwindling elsewhere.

That said, to fully benefit from high rates, you must put your savings into the right type of account. Some accounts offer a paltry interest rate that barely moves the needle on your balance. Others pay up to 10 times higher (or more).

By switching to one of these accounts, you can easily grow your savings faster. Yet, according to a recent Santander survey, nearly 70% of middle-income Americans have not moved their savings to high-yield accounts.

If you're among them, you're essentially missing out on free money. Fortunately, fixing this mistake is simple.

Best high-yield accounts to open today

If your savings are languishing in a low-yield account, it's time to change that. Put your money into one of the following accounts today to start reaping the benefits of high interest rates.

High-yield savings account

High-yield savings accounts work the same as regular savings accounts. They're protected by federal deposit insurance, so your money is safe up to $250,000 per account per institution. You can deposit your money by a variety of methods, including check deposit, mobile deposit and transfer from another account.

And you can access your money as needed, without penalty (as long as you adhere to any monthly withdrawal limits). This makes these accounts ideal for keeping your emergency fund.

The biggest difference is that high-yield savings accounts offer significantly higher APYs. As of August 28, 2023, the national rate for regular savings accounts stands at 0.43%, according to the FDIC. Today's top high-yield accounts, by comparison, offer rates up to 5% or more.

"Using a high-yield savings account for your emergency fund is simply a no-brainer," says Ryan McCarty, CFP and lead adviser of Castle Rock Investment Company. "If you have cash sitting for a rainy day or when things go wrong, you need it camped out in an account that makes your money make more cash. It's a super easy process, and you can have a new account opened and funded within 24 hours when working with the right bank!"

Savings account rates are variable, meaning they change in accordance with overall interest rates. So, if rates are high — as they are now — you can earn even more.

Compare top high-yield savings accounts online now.

Certificate of deposit (CD)

Another high-earning account to consider is a certificate of deposit (CD). CD rates often beat high-yield savings account rates, and these rates are locked in when you open the account. So even if overall interest rates go down, you can still enjoy today's high rates if you open a CD now.

However, there is one thing to consider when considering a CD. CDs come in different terms, typically ranging from a few months to several years. When you deposit money into a CD, you agree to keep it in the account for the entire term. If you need to access it before the term ends, you may face early withdrawal penalties that can erode your savings. For this reason, CDs are best for specific savings goals rather than a rainy day fund you might need to dip into at any time.

"CDs are often great for some part of your cash reserve that you know you won't need for the term of the CD," says Joe Marques, CFP, wealth advisor and co-CEO of Bolin Creek Wealth Advisors. For instance, you might open a CD to save money for a down payment on a house or an upcoming wedding.

You can also avoid early withdrawal penalties by opening a shorter-term CD, a no-penalty CD or creating a CD ladder.

View current CD offerings here.

The bottom line

"When it comes to deciding which [account] (CD or savings) is better for your situation, it really comes down to the timeframe you have before you may need the funds," says Faron Daugs, CFP, founder and CEO of Harrison Wallace Financial Group.

That said, there's no reason you can't open both types of accounts.

"Investing in both CDs and high-rate savings accounts allows you to maximize your savings while keeping some assets liquid," Chris Moore, director of deposit and payment strategy at Alliant Credit Union, previously told CBS News. "This could prove beneficial during turbulent financial times." 

Whichever route you take, opening a high-yield savings account or CD is a fast, simple process that can start paying off immediately. At a time when so much of the financial news is grim, you owe it to yourself to take advantage of any bright side you can.