3 Savings Accounts Still Beating Inflation, Even as Rate Cools

Inflation eased to 3.4% in July, down from a level above 4% in May, according to the Bureau of Labor Statistics. Core inflation, which excludes food and energy, also slipped slightly, from 2.6% to 2.5%.

But with the rate still above the Federal Reserve's 2% target, many savers may want to move money out of low-yield accounts. A traditional savings account currently pays just 0.38% interest, well below inflation, meaning money left there is effectively losing value.

Three types of accounts, by contrast, are currently outpacing inflation.

High-yield savings accounts are paying more than 4% interest, over half a percentage point above the current inflation rate. They function like traditional savings accounts, allowing regular deposits and withdrawals, but with a higher rate. Some banks offer rates considerably above the 4% baseline for savers who shop around.

Money market accounts offer the lowest rates of the three, around 3.90%, but still above inflation. They also come with check-writing features not typically available with other savings accounts, and rates could rise further if the Federal Reserve raises rates later this year.

Certificates of deposit (CDs) offer the highest returns among the three, with some rates reaching 4.25% to 4.40%. CD rates are fixed for the account's term, allowing savers to know exactly what they'll earn by the maturity date. However, savers should only deposit money they can leave untouched, since early withdrawal penalties can wipe out earned interest.

All three account types currently outpace inflation, but that advantage isn't guaranteed to last. If inflation keeps declining, interest rates could be cut, reducing returns on these accounts over time. Financial experts suggest opening one or more of these accounts soon to lock in today's higher rates while they remain available. Online marketplaces that compare rates, terms and banks can make it easier to get started.