All's Well That Ends Flourishing: The Latest Jobs Report Boosts Savers' Bank Accounts
Impact of Last Friday's Employment Data on Your Savings and Certificate of Deposit (CD) Plans
Good ol' Friday brought a much-needed breath of fresh air, as the highly anticipated April job market report revealed stronger-than-anticipated resilience. With more jobs added than economists predicted, this news is a breathe of relief for many, especially amid concerns President Trump's April tariff maneuvers could trigger an employment slowdown, potentially signaling a looming recession.
For the time being, this employment data eases the heat off the Fed and puts a pause on the race to cut interest rates, with experts expecting the central bank to hold steady until July—fantastic news for stingy savers out there! A prolonged rate freeze means the top savings, money market, and CD rates could maintain their position, leaving our modest stores of cash earning a pretty penny longer.
The Bustle in Brussels: How the Latest Jobs Numbers Impact Your Savings
It's a twisted financial dance, with one factor influencing another in a seemingly endless, waltzing ripple across U.S. markets. The April monthly jobs report is just one of these factors, boasting an outsized impact on various aspects of our economy, often appearing unrelated.
One of those impacts is the direct connection between the U.S. job market and what banks and credit unions offer for your cash deposits, though the link between the two may not initially seem obvious. Frankly, while there isn't a direct tie between the two, the monthly jobs report remains a crucial factor that the Fed takes into account as it decides whether to raise, lower, or leave the Federal Funds Rate unchanged.
The Federal Funds Rate, in turn, has a significant impact on the rates that banks and credit unions pay on savings, money market, and CD accounts. A hike in the Federal Funds Rate typically pushes bank APYs up, while a cut by the central bank brings down those rates.
The Dance: How the Jobs Report Can Maneuver the Fed's Steps
You'd think those rosy April employment numbers would send the Fed dancing for joy, right? Well, not so fast! There were concerns that the economic rollercoaster surrounding Mr. Trump's tariff tantrum last month would cause a jobs downturn—a red flag for a potential recession lurking around the corner. In that scenario, the pressure to lower the benchmark rate would have escalated rapidly, putting the Fed in a tight spot.
But alas, the good news is that the labor market is demonstrating remarkable resilience, sparing the Fed from having to intervene to salvage the economy—for now, at least.
With the economy on solid ground, financial markets have adjusted their prognostications, pushing back the probability of a potential rate cut to a later date, as indicated by the CME Group's FedWatch Tool. Early on, the chances of a June rate reduction looked promising, but now, only about 35% of traders are betting on a June cut, with the majority predicting a rate cut happening at the July meeting or later.
What's This Mean for Your Wallet?
If these forecasts pan out, then those tantalizing APYs on high-yield savings accounts (up to 5.00% APY), money market accounts (as much as 4.40%), and even the best nationwide CD rates could remain stable for 2-3 months. However, it's essential to keep in mind that when a rate cut looms on the horizon, CD rates may start falling sooner than savings account rates. That's because CDs come with a rate guarantee for months or even years into the future. So, if a rate cut eventually seems inevitable, banks and credit unions will often lower their CD rates beforehand.
Following this logic, it's still a smart idea to secure a CD while you can. Although you might have some time to lock in today's rates, there's no guarantee that these lucrative offers will stick around forever. With little chance of a rate spike in the coming months, the potential risk for future CD rates is almost exclusively downside. If you have a portion of your savings that you can commit for a few months, a year, or even longer, why not take advantage of today's impressive rates (up to 4.50%)?
Ranking the Best CDs and Savings Accounts
For your browsing convenience, we've compiled updates to the best CD and savings account rates every business day:
- Best 3-Month CD Rates
- Best 6-Month CD Rates
- Best 1-Year CD Rates
- Best 18-Month CD Rates
- Best 2-Year CD Rates
- Best 3-Year CD Rates
- Best 4-Year CD Rates
- Best 5-Year CD Rates
- Best High-Yield Savings Accounts
- Best Money Market Accounts
Word to the Wise
Before you leap into these high-yielding accounts, remember that the "top rates" cited here represent the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. These rates are a far cry from the national average, which takes into account all banks offering a CD or savings account of a particular term, including many big banks that pay notably less in interest.
How We Discover the Best Savings and CD Rates
Every business day, Investopedia keeps a close eye on the rate data of more than 200 banks and credit unions offering savings accounts and CDs to customers nationwide, and we determine the daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured, either by the FDIC (for banks) or by the NCUA (for credit unions), and the account's minimum initial deposit must not exceed $25,000. It should also not specify a maximum deposit amount below $5,000, while banks need to be available in at least 40 states to qualify as nationally available. Lastly, credit unions whose donation requirement exceeds $40 will be excluded from our lists.
For more detailed information on how we determine the best rates, read our full methodology.
- The March jobs report, being a significant factor influencing the Federal Funds Rate, directly affects the interest rates offered on savings, money market, and CD accounts at banks and credit unions.
- Given the current forecasts suggesting a potential rate freeze for 2-3 months due to the robust April job market numbers, high-yield savings accounts, money market accounts, and even CD rates could remain stable in the short term, making it an opportune time to secure a CD with lucrative rates before potential future rate cuts.
