With the Fed poised to cut interest rates next week, the ripple effect will show up in certificates of deposit and high-yield savings accounts, which currently offer rates of more than 5%.
They aren’t likely to fall dramatically following a rate cut but rather ease back closer to 4% and linger above the inflation rate for at least the next year. So these accounts should still be your go-to for your emergency fund or cash set aside for short-term expenses.
That said, the Fed’s anticipated action offers an opportunity to make some money moves that take advantage of the downward tilt in interest rates.
“The projected cutting may pull the rug from under the high-yield savings rates,” Preston D. Cherry, founder and president of Concurrent Financial Planning, told Yahoo Finance. “Now might be the best time we’ve seen in a few years to swap cash in high-yield savings for long-term bonds to lock in a higher yield for income payments for lifestyle and retirement portfolios.”
Since 2022, when the Fed began to raise short-term interest rates, bank savings accounts have been a better place to park your cash than bonds. That’s set to change.
Advertisement
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
Bonds are back
It’s a good time to shift to bonds for those nearing retirement who are looking to rebalance their retirement savings amid stock market volatility.
The best way to earn a high total return from a bond or bond fund is to buy it when interest rates are high but about to come down, Cherry said.
If you buy bonds toward the end of a period when rates are rising, you can lock in high coupon yields and enjoy the increase in the market value of your bond once rates start to come down.
And if you’re a bond lover, you’re up. After more than a decade of dismal bond yields, the two-fold impact of high rates right now and falling inflation offers an opportunity for investment income. When interest rates move lower, bond prices will rise. (Interest rates and bond prices move in opposite directions.)
Advertisement
“Adding low-price and higher-yield long-term bonds at current levels could add total return diversification value to your bond and overall investment portfolio, which has not been the case in recent past rate-raising environments,” Cherry said.
This is a narrow opportunity, though, before rates start dipping and bond prices go up.
“If you have adequate liquidity and won’t need to tap the money at a moment’s notice, then locking in bond yields now over a multiyear period can provide a more predictable income stream,” Greg McBride, chief financial analyst at Bankrate.com, told Yahoo Finance.
“As the Fed starts cutting interest rates, short-term yields will fall faster than long-term yields in the months ahead, so do this for the income rather than the expectation of capital gains,” he said.
Advertisement
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Fidelity offers over 100,000 bonds, including US Treasury, corporate, and municipal bonds. Most have mid- to high-quality credit ratings, but to me the sheer number of choices is mind-boggling. (Getty Images) (damircudic via Getty Images)
Laddering provides a ‘more predictable income stream‘
One way savers can pivot as rates head down is to set up a bond or CD ladder with staggered maturities, instead of investing all your funds in a single CD or bond with one set term length. This tactic can provide “a more predictable income stream while providing regular access to principal,” McBride said.
I hold my personal savings, for example, in several buckets, including six-month and one-year CDs, a money market account, high-yield savings accounts, and a checking account.
The bulk of my retirement holding is stocks and bonds mainly through broad index funds. How you divide up your savings and investments between stock and bonds, mutual funds and money market funds, or high-yield savings accounts is a balance that only you will know you’re comfortable with, based on your risk tolerance and how soon you need to tap the funds.
Many retirees want a more conservative asset mix as they age so they don’t face that uneasy feeling when the stock market is shaky. That’s why near-retirees and retirees, in particular, who haven’t taken a gander at their asset allocations for a while should consider doing so.
Advertisement
Read more: CDs vs. bonds: What’s the difference, and which one is right for me?
How to put money in bonds for right now and retirement
Most 401(k) investors are in bond mutual funds for the fixed-income portion of their portfolios, which are highly diversified and usually invested in intermediate (five-year) high-quality government and corporate bonds.
Most of us aren’t researching and investing, for instance, in individual intermediate bonds. If you opt to do-it-yourself and choose individual bonds and hold them until they mature, you’ve got plenty to select from, of course. Fidelity offers over 100,000 bonds, including US Treasury, corporate, and municipal bonds. Most have mid- to high-quality credit ratings, but to me the sheer number of choices is mind-boggling.
So I buy shares in a wide range of individual bonds via a bond mutual fund or ETF to add a bond ballast to my retirement accounts. The Vanguard Total Bond Market ETF, for example, is a diversified, one-stop shop comprising more than 11,000 “investment grade” bonds — including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities — all with maturities of more than one year.
Right now, more than 60% of the Vanguard fund’s total assets are in government bonds, and its year-to-date return is 4.94%.
Advertisement
As Vanguard notes, this fund “may be more appropriate for medium- or long-term goals where you’re looking for a reliable income stream and is appropriate for diversifying the risks of stocks in a portfolio.”
For shorter-term goals, staying ahead of rates falling is smart to lock in alluring rates for money you might need sooner rather than later.
Take a short survey and get matched with a vetted financial adviser.
Cash has ‘zero risk’ of losing nominal value
The majority of financial advisers I spoke to didn’t suggest any knee-jerk actions ahead of the Fed meeting. In other words, don’t close your bank accounts.
“Inflation has certainly moderated, but in our opinion is not likely to be a further decline substantially,” said Peter J. Klein, chief investment officer and founder of ALINE Wealth.
If that’s the case, the Fed will not keep lowering interest rates but will hold them steady moving forward.
Advertisement
“Looking at the long arc of inflation history, one can see the changes … leading to sticky and persistent inflationary pressures. So, the notion that rates will come down substantially — and stay down — is not our base case,” Klein said.
That means that those savings you have in a federally insured, accessible bank account earning above the rate of inflation remain a good bet. That’s especially the case for those nearing or in near retirement who plan to tap that money for living expenses and don’t want the worry that comes from price fluctuations in stocks and bonds.
“Cash is the only asset that an investor can deploy in a portfolio that has zero risk of losing its nominal value,” Klein added.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.
My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.
When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.
The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.
Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).
Advertisement
Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.
However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).
Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.
San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).
The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.
Advertisement
A peek inside the scorecard’s grades shows where trouble exists within California.
Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.
Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.
Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
Advertisement
On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
Advertisement
Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
Advertisement
$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
Advertisement
Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.
Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.
“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.
What You Need To Know
High school athletes with Division I prospects are learning to manage NIL money before they even reach college
Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources
Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era
Preston said the experience has already been eye-opening.
“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.
Advertisement
For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.
“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.
Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.
“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.
The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.
Advertisement
“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.
For these athletes, having the right support system makes all the difference.
“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.
Collins-Howard said the program has given him a broader perspective beyond just the game.
“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.
Advertisement
“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.
NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.
