2 savings accounts to consider if the Fed raises rates this September (and one to avoid)

Closing in on a 60% likelihood, according to the CME Group's FedWatch tool, the Federal Reserve could just be days away from issuing its first interest rate hike since 2023. While a 25-basis-point increase won't be any help for borrowers already saddled with higher costs on everything from mortgages to personal loans to credit cards, it could further increase the advantages savers have been able to exploit in recent years. A higher federal funds rate, after all, will equate to even higher rates on select savings accounts, resulting in bigger returns for those savers who know which accounts to leverage … and which ones to avoid.

Not all savings accounts are created equal, though, especially in today's unique economic environment. Knowing which ones can help you meet today's economic challenges, then, is more important than usual. And that's especially true if a September Fed rate hike becomes the first of multiple ones to be issued in the upcoming months versus just a single outlier. Below, we'll detail two specific savings accounts worth considering if the Fed ultimately does raise rates this September as well as one to avoid if you're trying to earn as much interest as possible in this climate.

Start by seeing how much interest you could be earning with a high-yield savings account here.

2 savings accounts to consider if the Fed raises rates this September

To better take advantage of today's interest rate climate – and what could come next – savers are encouraged to consider the following two savings accounts, either individually or as a combination to benefit from the unique features each offers:

A high-yield savings account

High-yield savings accounts currently come with rates around 4.10% and, more importantly, they're variable and subject to change based on market conditions. That's a good thing this month because if the Fed does raise rates, rates and returns here are likely to tick up slightly as well, even potentially before the Fed rate hike is made official. 

While the best high-yield savings accounts are generally offered online versus your local bank branch, the shift to banking online could be worth it if it means a much bigger return on your money each month. Take the time, then, to thoroughly research your options to see what's available. With online marketplaces listing all of the information you need in one location, you can start this process from your phone right now.

Shop for high-yield savings accounts online here.

A money market account

If you want to streamline your banking needs with a single account, a money market account is worth considering now. It comes with a top rate of 4.00% in early September, but that rate is also variable and well-positioned to rise higher alongside any Fed rate increases. 

At the same time, the money market account offers something high-yield savings accounts can't: check-writing abilities that can be useful for savers who want to use a single account to save money and pay expenses. However, with rates here ranging from bank to bank, like high-yield savings accounts, it's important to shop around before making any transfers.

Avoid traditional savings accounts now

The average interest rate on a traditional savings account is just 0.38% according to the FDIC, making it many times less profitable than either of the two alternatives outlined above. While this account's rate is also variable and while it may also increase if the Fed raises rates, the difference between this account and the other two is likely to remain stark. 

And with inflation still sitting comfortably over 3% right now, you'll fail to outpace it by keeping any money here. Technically, savers will actually be losing money by maintaining this account when the other two alternatives are still offering rates in the 4% range. 

The bottom line

A high-yield savings and money market account are worth serious evaluation now, especially if the Federal Reserve raises interest rates at the conclusion of its next meeting on September 16. A traditional savings account, however, is worth skipping as it has a very low rate that is unlikely to increase with prospective Fed rate hikes to come later in the year. Just be sure to review your options and shop around before opening an account to ensure that the one you ultimately choose is the best and most profitable option.