Over the past two years, savers have enjoyed some of the highest yields in decades on savings accounts, CDs, bonds, and more. But that streak may soon end.
On September 17, the Federal Reserve is expected to announce whether it will cut benchmark interest rates. According to the Chicago Mercantile Exchange’s FedWatch tool, there’s more than a 90% chance of a rate cut.
If rates move downward, what happens to your money — and how can you preserve the yields you’re earning now? At CreditVana, we break down how different savings products react when the Fed makes a move.
Cash Management Accounts
What they are:
These accounts combine features of savings, checking, and brokerage accounts. They’re often offered by investment firms as a place to park idle cash. Some standalone versions exist, offering high APYs and sometimes even extended FDIC insurance (beyond the standard $250,000).
Interest rate sensitivity: Moderate.
Because banks lending your money earn yields tied to Fed rates, cash management APYs may dip when the Fed cuts. Some providers offer introductory promotional rates, which can help cushion the impact temporarily.
Certificates of Deposit (CDs)
What they are:
CDs lock in your money for a set period — anywhere from a few months to several years — and pay a fixed interest rateuntil maturity.
Interest rate sensitivity: Not sensitive (for existing CDs).
If you open a CD today, your rate won’t change, making CDs appealing in a falling-rate environment. But note: new CD rates will likely decline after a Fed cut.
High-Yield Savings Accounts
What they are:
Online banks and fintechs offer these accounts with better APYs than traditional banks. They’re popular for short-term savings goals.
Interest rate sensitivity: Fairly sensitive.
Rates usually move in line with Fed policy, so expect yields to fall when the Fed cuts. A few institutions offer bonus APYs for new customers, but most accounts will see APYs decline fairly quickly.
Money Market Accounts
What they are:
These accounts invest in ultra-short-term loans between banks, companies, and government agencies.
Interest rate sensitivity: Very sensitive.
Because money market securities turn over quickly, their yields usually fall almost immediately when the Fed cuts rates. If the Fed trims by 0.25%, expect your money market APY to drop by roughly the same.
Treasury Bonds, Bills, and Notes
What they are:
Loans to the U.S. government. Short-term Treasuries (T-bills) are sold at a discount, while long-term bonds pay regular interest. You can buy them directly at TreasuryDirect.gov or through a brokerage account.
Interest rate sensitivity: Depends on how you invest.
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Individual Treasuries (held to maturity): Fixed yield, unaffected by rate cuts.
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Treasury ETFs or mutual funds: Yields fluctuate as older bonds mature and are replaced with new, lower-yield ones.
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Treasury accounts: Typically roll money into new T-bills, which means yields fall in line with Fed moves.
CreditVana’s Take
If the Fed cuts rates, savers should lock in fixed yields now (via CDs or Treasuries held to maturity) to protect against falling APYs. Products like high-yield savings and money market accounts may lose value quickly when benchmark rates drop.
Just as with your credit score, understanding how external factors like Fed policy affect your money puts you in control.
👉 Bottom Line: Rate cuts may benefit borrowers, but they usually hurt savers. If you want to preserve today’s high yields, consider moving part of your cash into fixed-rate products before the Fed makes its announcement.
Would you like me to also create a side-by-side comparison table (Cash Management vs. CDs vs. High-Yield Savings vs. Money Market vs. Treasuries) showing rate sensitivity, pros, cons, and best use cases? That could give CreditVana readers a quick “cheat sheet” to act before rates fall.
