The future of interest rate cuts in 2025 appears uncertain, but savers can still benefit from attractive yields on cash deposits. Recent minutes from the Federal Reserve indicated a cautious approach to rate cuts, as they are concerned about inflation. The Fed has reduced its anticipated rate cuts for 2025 from four to two, leading savings institutions to adjust their deposit product yields downward. For example, Bread Financial’s one-year CD yield has fallen from 5.25% to 4.1%. Despite the Fed’s gradual rate-cutting stance, banks may not significantly decrease deposit yields until further developments occur. Currently, Marcus by Goldman Sachs offers the highest one-year CD yield at 4.25%, with Bread Financial and Sallie Mae close behind at 4.1%. However, savers should be cautious of reinvestment risks upon CD maturity and potential penalties for early redemption. For those seeking more liquidity, high-yield savings accounts provide competitive rates, with LendingClub at 4.75% and Bread Financial at 4.5%. These rates exceed the national average of 0.56%, and deposits are protected up to $250,000 by the Federal Deposit Insurance Corporation.
