It may seem like little consolation when 30-year mortgage rates are above 6% and credit-card rates are close to 17%, but the tradeoff with the Federal Reserve hiking rates is that you can finally get a somewhat heftier payout for stockpiling cash.
While traditional banks are still offering 0.01% interest rates on cash savings, online banks are averaging close to 2% now and are expected to rise above 3% soon. For those willing to lock up their money for 12 months, rates on one-year certificates of deposit are attractive too, with an average yield of 2.86%, according to DepositAccounts.com.
But short-term T-bills offer even better rates right now, with more flexibility. Of course, yields will only climb for so long — whether for T-bills or any other cash-like investment. Once it seems as though inflation has topped out and the Fed starts to ease up on rates will be the time to be a little less boring. Until then, you might as well maximize what your cash can do for you.
Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. Previously, she oversaw tax coverage for Bloomberg News.