Four Ways Rising Interest Rates Can Work in Your Favor

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Interest rates have been climbing, and the impact is being felt in several corners of the financial world. Variable-rate student loan borrowers and people carrying credit card balances are likely to notice the pressure, and prospective homebuyers who delayed purchasing during a period of historically low rates now face much higher mortgage costs.

Still, rising rates are not entirely bad news. For savers, certain accounts and investment products can offer stronger returns than they did when rates were lower.

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4 Ways You Can Benefit From Higher Interest Rates

Here’s a look at several account types that may see an upside when interest rates go up.

1. High-Yield Savings Accounts

A high-yield savings account, or HYSA, is a savings account that pays more interest than a standard one, which the FDIC says earns about 0.38%.

Many of the strongest HYSAs available offer rates near 3% or more.

In exchange for those better returns, some accounts come with rules such as opening deposit requirements, minimum balances, or monthly fees. Even so, plenty of no-fee HYSAs with no minimum balance exist.

If you can work within those terms, an HYSA can be a simple way to help your savings grow faster.

2. Money Market Accounts

A money market account differs from a traditional savings account because it typically includes check-writing and debit card access. These accounts also tend to limit the number of transfers and withdrawals you can make each month.

They generally pay more interest than standard savings accounts, which can appeal to people who want relatively easy access to their cash while still earning something on it.

Top money market rates are currently in the 3% to 4.5% range.

3. Certificates of Deposit

A certificate of deposit, or CD, is a savings product that pays interest over a fixed term while your money stays deposited for that period.

Because the funds are less accessible, CDs usually offer higher rates than regular savings accounts.

The best CD rates are above 4%.

4. I Bonds

I Bonds, or Series I Savings Bonds, are designed to help protect against inflation and have attracted attention during periods of elevated rates.

They combine a fixed rate and an inflation rate to form a composite rate. The fixed rate stays the same for the bond’s life, while the inflation component changes every six months.

I Bonds are offering a composite rate of 4.26% through October 2026.

Keep in mind that you must hold them for at least one year, and cashing out before five years means giving up some interest.