Consumers are likely experiencing sticker shock as new government data shows annual inflation rising at the fastest pace in more than 30 years.
So-called headline inflation, including food and energy prices, rose at a 4.4% annual rate in September, the fastest since 1991. With higher prices likely here to stay for now and interest rates still low, inflation could also be taking a bite out of another important area for consumers: their emergency savings.
Consequently, you may want to re-evaluate where your cash is deposited. While it may be tempting to chase higher returns, it’s still best to take a conservative approach.
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“With cash, if it’s intended for something like an emergency fund or a short-term expense, it needs to be kept safe,” said Ken Tumin, founder and editor of DepositAccounts.com. “Stocks or bitcoin or other types of investments are not appropriate for it.”
There are generally a handful of options for emergency funds. Each offers potential benefits and drawbacks.
If you want to keep things simple, an online savings or checking account can be the best way to go, Tumin said.
“By being liquid, you always have the option to move it if the rate goes down or if you find a better rate elsewhere,” which is particularly important if you’re worried about inflation, Tumin said.
High-yield checking accounts
Many U.S. banks and credit unions currently offer high-yield …….