The Federal Reserve's rate policy and the outlook for savings yields are uncertain as the second half of the year begins, but there are still a few places offering attractive interest rates on cash.
Investors started 2026 with an optimistic outlook for rate cuts, but six months into the year, the likelihood of a rate hike appears more probable as the economy grapples with persistent inflation. May's reading of the personal consumption expenditures price index came in at an annual rate of 4.1%, the highest since April 2023.
Accordingly, banks have been fine-tuning the rates they offer on deposits, with some trimming back the interest they pay on high-yield savings accounts while others boost what they'll pay for certificates of deposit.
As Bank of America analyst Brandon Berman noted, banks continue to increase rates offered on 1Y CDs amid the higher-for-longer rate backdrop. The average 1Y CD annual percentage yield is up 19 basis points quarter-to-date, with new money rates about 35 basis points higher than the group average.
For investors who are comfortable locking up some of their savings in a CD for a year, several banks are offering annual percentage yields of 4% or better.
As of Tuesday, Bread Financial offers a 4% yield on a 1-year CD, as does Citi, while Popular Direct is paying 4.15% on the same maturity.
