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Key Takeaways
- If you’re required to take an RMD by the end of 2025, you could consider withdrawing early while the stock market is high.
- If you don’t need the cash immediately, you can earn a safe, low-risk return of 4%-5% by parking your funds in the right accounts.
- Savings accounts allow flexible access to your funds, with the best high-yield savings accounts paying up to 5% right now.
- CDs let you lock in a rate you can count on for months or years, with today’s best CDs offering mid-4% returns for 3 months to 5 years.
- Concerned about inflation? I bonds adjust their rate every 6 months to stay ahead of inflation, making them a smart long-term option.
The full article continues below these offers from our partners.
For RMD Cash You Want to Withdraw But Don’t Need Right Now, It’s Easy to Earn 4%–5%
With the stock market on a roll for the last two months, but economic uncertainty still lingering for the rest of this year, you may be considering taking your 2025 Required Minimum Distribution (RMD) sooner rather than later. While retirement account holders age 73 or older aren’t required to withdraw funds until the end of December, taking your RMD now could allow you to sell fewer shares of stocks or index funds to meet the minimum.
Even if you don’t need your RMD funds right away, it can still be a smart move since returns on cash savings are excellent right now. With the Federal Reserve’s benchmark interest rate still on hold—and no 2025 rate cuts expected before September—you can easily earn 4%–5% on your savings with virtually no risk. With some options, you can even lock in a guaranteed return for months or years.
High-Yield Savings Accounts Keep Cash Accessible
One of the best ways to earn a solid return on RMD funds you don’t need right now is by parking them in one of the country’s top high-yield savings accounts. We track the best-paying options every business day, and the current top rate is 5.00% APY. Even if the top-rate accounts don’t meet your needs, our daily ranking of the best savings accounts has nearly 20 other options paying 4.30% or better.
However, there are some downsides to consider. Savings account rates are variable, so there’s no guarantee of future returns. The rate you earn depends on what the Federal Reserve does with its benchmark rate, and there’s no way to predict what any given account will pay later this year or in 2026. For now, though, high-yield savings accounts are riding a high, offering great returns that could last several more months.
This Unique Online Account Pays 5.00%
Although checking accounts aren’t typically known for earning high returns, a standout option from mph.bank is currently offering 5.00% APY for any month in which at least $2,000 in direct deposits are received. If this requirement is manageable for you, consider opening the account and using it as a savings vehicle for your RMD or other funds.
CDs Secure One of Today’s Rates for Months or Years
While savings account rates can drop anytime, certificates of deposit (CDs) offer a fixed and guaranteed return. You can lock in your rate for a few months or up to several years.
Of course, a predictable rate isn’t worth much if the return is subpar, which is why today’s CDs are such a good option. Thanks to the Federal Reserve’s historic rate hikes of 2022–2023, the best CDs are still offering mid-4% returns across all of the major terms.
Just keep in mind that securing a CD’s rate requires committing your funds for the full term. If you cash out before maturity, you’ll face an early withdrawal penalty, which can vary from mild to severe among institutions. So it’s smart to choose your term wisely and then research the early withdrawal penalty of CDs you’re considering.
I Bonds Offer Inflation Protection for Up to 30 Years
I bonds are so-named because they’re designed to pay a rate that tracks inflation, making them a reliable way to ensure your cash savings always outpace what you’ll lose to inflationary price increases.
This is especially beneficial for long-term investors—such as retirees—who want to keep some savings in a safe, predictable vehicle. I bonds can be held for up to 30 years, with their interest rate adjusting every six months based on the latest inflation trends.
I Bond Purchases Are Limited
Each person can purchase up to $10,000 in electronic I bonds per year. In addition, those receiving a tax refund can buy up to $5,000 more in paper I bonds using their refund. Some older investors routinely buy $10,000 to $15,000 in I bonds annually—stockpiling them until needed, knowing they will always earn an inflation-beating return.
Currently, new I bonds issued by Oct. 31 are paying 3.98% for the first six months. While that’s lower than you can lock in with a CD, if inflation rises, your I bond rate will also rise. Additionally, the interest earned on I bonds is exempt from state income tax.
Tip
Want to consider Treasuries? On Fridays, we publish the top rates for all types of cash accounts. There you can find the most recent Treasury rates for bonds from 1 month to 30 years.
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
Important
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
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