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Why you should open a high-yield savings account with inflation increasing again

A high-yield savings account can be a smart bet for those looking for a buffer against rising inflation. Getty Images/iStockphoto

Inflation is on the rise again and American borrowers are likely to feel further pain. That was the sentiment on Wednesday after the latest inflation report from the Bureau of Labor Statistics showed inflation rising to 3.5% in March. That's up from February's 3.2% and a full percentage and a half point over the Federal Reserve's target 2% goal. And while hope was high that the goal was in reach — and interest rate cuts would come in tandem — the new inflation report significantly reduces that likelihood.

But while high inflation and correspondingly high interest rates will keep borrowing costs high, they'll also maintain the elevated returns savers can secure with select accounts. And one great way to earn those rates now is with a high-yield savings account. Below, we'll detail three reasons why you should open a high-yield savings account now with inflation increasing again.

See how much more you could be earning with a high-yield savings account here now.

Why you should open a high-yield savings account with inflation increasing again

Here are three compelling reasons why you may want to open this type of savings account now:

Rates are high (and could go higher)

It's not difficult to find a high-yield savings account with a rate of 5.30% or higher right now. Some savers may even qualify for an account with a 6% rate. That's a significant amount of money that can be earned simply by transferring your funds from one account to another. 

And those rates may go even higher now that inflation is rising again and rate increases appear more likely than they did earlier in the year. But because the rates on high-yield savings accounts are variable and subject to change, it makes sense to be aggressive to earn today's rates while they're still high. 

Get started with a high-yield savings account here today.

You're likely losing money

While rates on high-yield savings accounts are elevated, rates on regular savings accounts aren't nearly as high. The average rate on a regular account now is just 0.47%. So, if you're keeping your money in one of those accounts versus one of the high-yield ones offering exponentially more interest, you're essentially losing money. This is a simple mistake to fix, and one that should be corrected rapidly now that inflation is likely to continue to eat away at the purchasing power of your dollars. 

CDs are more restrictive

While certificates of deposit (CD) accounts are also advantageous to open right now (they may even have slightly higher rates than high-yield savings accounts) they're also more restrictive. Savers won't be able to access their funds quickly without paying an early withdrawal penalty to get it. And the rates on CDs are locked, so if inflation continues to be an issue — and interest rates rise to tame it — the rates on CDs won't budge. However, high-yield savings account holders will benefit because rates on these accounts can rise (or fall) as the rate climate evolves. 

The bottom line

An increase in inflation doesn't need to be completely detrimental. With an opportunity to earn big returns with a high-yield savings account now, savers can help offset some of the costs of inflation and higher interest rates. With rates on these accounts high now, the rates on regular accounts minimal and the restrictions on CDs discouraging for many, it makes sense to open a high-yield savings account today with inflation increasing again.

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