WHERE TO STASH CASH AS YIELDS FALL

Your best options depend on how soon you'll need the money and your tolerance for risk.

- BY KERRI ANNE RENZULLI

THE Federal Reserve's interest rate cuts during the fall are having a ripple effect across most consumer saving rates.

The federal funds rate—the rate banks use to borrow and lend to one another—recently dropped to a target range of 3.75% to 4%, the lowest level in about three years. And the consensus among economists is that rates will continue to fall modestly in 2026, perhaps by another half a percentage point or so by year-end.

The result for savers: The days of easily earning 5% or more on cash have passed, financial advisers say. "Many people were getting used to 4% and 5% yields on short-term money, but this is quickly drifting down, to as low as 2% to 3% in some cases," says certified financial planner Todd Calamita, president of Calamita Wealth Management in Charlotte, N.C. "Complacency can cost people thousands of dollars if they don’t keep a watchful eye on the interest their accounts are paying." Today's lower savings rates, though, are still higher than cash yields have been for much of the past 15 years—1% or less was common during the period between the Great Recession and the pandemic—and, on average, they continue to outpace inflation. So you can still earn a solid real return, if you shop around.

Experts caution, however, that nabbing the best rate shouldn't be your only consideration when it comes to storing cash. “Safety and liquidity should also guide your decision, not just yield alone,” says Bennett Gordon, a CFP with MGR Wealth Management in Boca Raton, Fla.

Here is what advisers recommend as the best short-term savings options now, depending on how quickly you might need access to your money and your tolerance for risk.

Easy access, ironclad safety.