Six Tips to Managing Your Low Savings Interest Rates

In March 2020, the Federal Reserve made two emergency rate cuts in response to the pandemic. This shifted the rate of federal funds to a threshold reach of 0-0.25 percent. This has caused yields on CDs and savings accounts to steadily decline.

Although it seems impossible to save at this time, and the way that the Interest rates have plummeted, small savings are still much better than no savings. Here are a few things to ponder while interest rates are declining.

1. Pay Close Attention to Your Goals and Savings

First off, don't make any changes to how you manage your finances and investments. Keep up with the goals that are specific to you and your financial outlook, so just keep doing what you're doing.

This is the time to focus on creating an emergency fund. A good thing to remember is that an emergency fund is always a good idea to have whether rates are declining or not. 

2. Do Some Comparison Shopping

If you're trying to meet a specific savings goal, it's important to earn as much interest as you possibly can while rates are falling, and definitely look around to find the best deal. Savings account rates are around 0.7 percent APY, or 0.08 percent, which is about nine times the national average.

Don't forget to check online banks that are FDIC-insured, they're just as secure as conventional banks. Be ready to compare the interest rates of different banks, if you're a saver, you can pick a financial institution that offers a fixed rate for a certain amount of time. Online-only banks can earn more than 10 times the normal return and can offer some of the best rates too.

3. Eliminating Bank Fees

If your checking or savings account charges a monthly fee, consider switching to an account that doesn't or try to get the fees waived by setting up a direct deposit, or some other feature that your bank provides in reference to savings.

It would be wise for you to also avoid overdraft fees; imagine how much you could save by eliminating those overdraft fees for good.

4. Strategic CD Laddering

CD laddering refers to a strategy where you purchase multiple CDs that will mature at different intervals over time. When each CD comes due in two or more years you can either spend or reinvest, it's up to you.

5. Account Sign-up Bonuses May Be Worth Looking Into

There are some banks — that do offer promotions or perks to new customers when they open an account. If your bank charges a fee and there's no way around it, then changing banks might not be such a bad idea if you can find better features and interest rates elsewhere. Remember, the goal is to save, so every dollar counts.

6. You Can Still Make Smart Money Moves

Remember to put a certain amount away into your savings weekly, monthly, or every time you make a purchase. You can set it up so that when you're shopping, your loose change automatically goes into your savings.