- The Consumer Price Index showed that inflation rates rose for the third straight month in December.
- As inflation rises, it's a good idea to evaluate whether your financial setup is working for you.
- Here are some ways to decide when and how to switch your bank account for a new one.
The Consumer Price Index, or CPI, has reported that inflation rates rose in December. This marks the third month in a row that inflation has risen, largely in response to the Federal Reserve lowering its interest rates in September, November, and December of last year.
While the best high-yield savings accounts offer rates that outpace inflation, not every savings account does. Here are some signs that it's time to switch your current savings account to one offered by another bank or credit union.
Are inflation rates going to continue rising?
When the CPI report talks about inflation, it refers to the difference between current prices for goods and services compared to the prices of goods and services from one year ago. The CPI's inflation rate for December 2024 — the latest month it has data on — is 2.9%, which means that goods and services generally cost 2.9% more than they did in December 2023.
While these rates are higher than they were previously, they aren't high from a historical perspective. "I would say, overall, the current inflation rate is not much higher than the long-term average of what we've seen," says Bini Lee, CFP® professional, vice president and head of planning and advice at Facet. "When you think about long-term inflation, it's typically about 3%," Lee adds.
That being said, recent events might cause inflation to rise more in the future. At the World Economic Forum, President Donald Trump gave a speech. In it, he said he'd "demand that interest rates drop immediately." Trump doesn't have the power to do that — that power rests in the Federal Reserve, the central banking system of the U.S. that's independent from the President. Tools like the CME Fedwatch tool indicate that the Fed's unlikely to lower interest rates at its next meeting.
But if the Fed agrees to lower interest rates at the next Fed meeting on January 28 and 29, inflation is likely to rise in response.
Trump has also said he would impose tariffs; if these tariffs go into effect, that could also cause inflation to rise.
How to know when to switch bank accounts
If your savings account isn't outpacing inflation, that could be a sign that it's time to switch to another bank or credit union.
Right now, high-yield savings accounts are a good way to protect your cash because their rates outpace inflation rates. It's pretty easy to find high-yield savings accounts fromonline banksor credit unions that offer interest rates over 4%, and some banks, such as the Varo Savings Account, Pibank Savings, and Openbank High Yield Savings, offer rates between 4.75% and 5.00% APY.
If you keep $5,000 in a traditional savings account or checking account with a rate of 0.01% APY, your purchasing power isn't keeping up with inflation. After a year, the $5,000 you started with isn't able to purchase as much as it did before you opened the account.
Even if your savings account is keeping up with inflation, it's good to periodically check on your financial setup to see if it's working for you and your savings goals. "I think it's always good to regularly check in on your finances," says Lee. She says that you should reevaluate your financial situation at least once a year.
What to consider when switching bank accounts
While high interest rates are important when choosing a new high-yield savings account, they aren't the only consideration. Lee mentions three things to look out for when opening a new bank account: interest rates, bank fees, and convenience.
Monthly bank maintenance fees, for example, can cut into your interest earnings and complicate your finance management. While savings accounts generally don't come with many fees, you'll still want to look out for things like withdrawal limits and wire transfer costs.
Lee says that mobile banking's convenience factor can save you money and time. "If I can do most of my transactions, if not all of my transactions, online, then I don't have to spend the time or gas to get to a brick-and-mortar location," says Lee.
Online banks can also help you earn slightly higher interest rates. We've provided a list of nationwide providers with competitive interest rates below.
| Featured Offer | APYAPYs (Annual Percentage Yields) are accurate as of 01/27/2025 | Minimum opening deposit |
| LendingClub LevelUp Savings Account | up to 4.50%* | $0 |
| BrioDirect High-Yield Savings Account | 4.55% | $5,000 |
| Barclays Tiered Savings | 4.25% to 4.50%** | $0 |
| Western Alliance Bank High-Yield Savings Account, powered by Raisin | 4.30% | $1 |
| CIT Bank Platinum Savings | 4.35% (with $5,000 minimum balance) | $100 |
When should I open a different type of account?
A savings account isn't the perfect fit for every savings goal, and there are some times when you'll want to switch your funds from a savings account to something entirely different.
"Savings accounts are awesome, but I think that one of the best ways to outpace inflation is investing in the stock market," says Lee. She says that investing can help you get a higher investment return than a savings account, but that investing — whether through a retirement account or a brokerage account — won't be the perfect fit for everyone's goals.
"Everybody's personal goals and where they are is a little bit different, so I would definitely recommend an emergency fund first before investing into the stock market," says Lee.