Summer can be the most expensive time of the year for many people. Parents may be worried about the cost of summer camps and keeping their kids busy while school is out. Summer is also a popular time to travel, so any extra money you have may be going towards your next trip (or paying for your most recent one).
But if you’ve got some extra cash lying around this July, it’s important to put it to good use – here are three great places to put your money right now.
1. High-yield savings accounts
The advantage of choosing a savings account is that it’s flexible: You can withdraw money to pay for a summer concert, home improvements, or whenever you’re ready to invest. Plus, savings accounts currently offer high yields, so you don’t have to settle for meager annual interest on the money you have in the bank.
It’s also important to know that stocks are generally rising at the moment. The S&P 500 Index, which is often considered a gauge of overall market performance, is up about 18% year to date. That might make you hesitant to buy stocks right now.
Our picks for the best high-yield savings accounts for 2024
American Express® High Yield Savings
Annual Interest
4.25%
Evaluation Information Circle with the letter I inside.
As of July 18, 2024, the annual interest rate is 4.25%.
Member FDIC.
Annual Interest
4.25%
Evaluation Information Circle with the letter I inside.
As of July 18, 2024, the annual interest rate is 4.25%.
Minimum winnings
1 dollar
Basque Interest Savings
Member FDIC.
Minimum winnings
$0
Citizens Access® Savings
Member FDIC.
Minimum winnings
$0.01
But that could change later this year if the market cools. Keeping your cash in a savings account gives you that option. You could also keep some cash in a brokerage account, but putting it in a high-yield savings account while you wait could pay you more interest.
2. Short-term CDs
CD interest rates are at their highest they’ve been in years, with many 12-month (or shorter) CDs paying around 5.00% interest, but CD rates could start to fall as early as August.
The Federal Reserve is scheduled to meet next at the end of July, and at that time the central bank may decide to finally implement the first interest rate cuts that have been discussed since the beginning of the year in response to subdued inflation.
If the Federal Reserve starts lowering its benchmark interest rate, CD rates are likely to follow suit, so now is a good time to lock in a CD at a favorable rate.
3. Long-term CDs
Knowing that the Federal Reserve is set to start cutting interest rates by the end of the year, banks are generally offering the best APYs on short-term CDs of 12 months or less. For longer-term CDs, the APY may be lower.
For example, a bank might currently offer a 12-month CD with an APY of 5.00%. That same bank might offer a 3-year CD with a 4.00% APY. But if you’re saving for a goal that’s 3 years away, the 3-year CD might make more sense even though it has a lower APY.
You don’t want to take the risk of investing in stocks because time is short and you may not have enough time to weather a market decline.
But if you stick to a 12-month CD in hopes of getting the highest interest rate, you could find yourself in a situation where you earn significantly less interest in years two and three as you start saving toward your goal. In other words, a three-year CD may earn you more interest overall than a 12-month CD, even if it has a lower APY.
It’s a good month to have money in your bank account, regardless of which account you choose, so consider your choice carefully and ultimately make a decision you’re happy with.
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