How to prevent your money from losing purchasing power

According to a 2025 Bankrate survey, 17% of savers have not gained any interest in their savings accounts, and an additional 17% have earned interest rates of less than 1%. With inflation continuing to erode the value of money over time, putting your savings in a low-wage account essentially means you’re losing money.

Good news? Today’s high-yield savings accounts and CDs offer rates that will help your money keep up with current inflation levels.

How to increase purchasing power and keep up with inflation

Although inflation has been cooled since its peak in 2022, it remains important to ensure that money is working enough to maintain the power purchased. According to a weekly bank account survey of Bankrate, the current inflation rate is at around 2.4%, but the national average savings yield remains at 0.6.

If your money is earning less than inflation, you are losing your purchasing power. This is the most effective way to protect and grow your money value.

Keep your money in a high-yield savings account

A high-yield savings account is one of the safest ways to beat inflation while making money easy to access. These accounts currently offer around 4% APY. It is significantly higher than the current inflation rate.

Benefits of a high-yield savings account:

• FDIC is covered by insurance per bank, up to $250,000 per depositor
• Easy access to your money if you need it
• There is no risk of principal loss
• Usually, the rates travelling along with the Federal Reserve will change

The key is shopping. Many top-high yield savings accounts have raised rates along with hiking the Fed rate. Moving emergency funds or short-term savings to a high-yield account can make meaningful differences in maintaining purchasing power.

Compare the best high yield savings accounts today →

Put your money on a high-yield CD

A certificate of deposit provides another safe way to lock in return to defeating inflation, especially if you have money that is not needed for a particular period.

Current CD rates hover around 4% APY depending on the duration, with the highest rates usually seen on CDs between 6 and 18 months. Unlike a savings account, CDS guarantees rates over the entire period and protects you from potential rate drops.

When the CD makes sense:

• You have money for a specific future goal (down payment, vacation etc.)
• You want to lock today’s high rates
• No immediate access to funds is required

Find the best CD rates of 2025 →

Invest in stocks

For money you don’t need for years, investments in stocks have historically provided returns that far exceed inflation. The S&P 500 is much more volatility than a savings account or CD, but on average, it earns around 10% annual revenue over the long term.

Things to consider:

• Risk tolerance: The value of inventory can drop and you can lose money
• Time Horizon: It is generally recommended for money that is not needed for at least 5-7 years
• Diversification: Consider a wide range of market index funds rather than individual stocks

If you already have emergency funds and enough savings cash, investing some money could potentially provide higher returns to help you get ahead of inflation. However, only invest the money you can afford to potentially lose.

Learn about opening a securities company account →

How does inflation affect savings?

The only important return is what you earn after inflation. If you are not behind inflation, you will slowly destroy your wealth over time.

When people see monthly interest credits in their statements, they may think they are “earning” their money. However, if that account generates 0.01% APY and the inflation rate is 2.4%, the result is actually a negative actual return.

Think about it like this. Inflation works like an invisible tax on your money. This loss may not appear in bank statements, such as a decline in securities trading accounts, but the effects of inflation accumulate over time.

Real-world examples:

• Your Savings Account: Earn $10,000 0.01% APY = Annual Interest 1 $1
• 2.4% inflation: Your money loses $240 in electricity purchased every year
• Net loss: $239 per year with actual purchasing power

This is why it’s important to be strategic about where you keep your money, especially your larger balance.

Expert Tips: Focus on the actual returns

“People are often obsessed with credit card rewards that save $200 a year, but keep $50,000 at 0.25% Apy. The opportunity cost of low-revenue accounts can warn other financial optimizations, so you have to look at every detail.”

– Mark Meredith, Certified Financial Planner

If you are in a low withdrawal account, here is how much inflation you are taking

Many people are used to keeping their money in low-revenue accounts, but seeing the actual costs can motivate your actions. Here’s how inflation affects various account balances:

Annual purchase power losses by account balance (assuming 2.4% inflation and 0.01% APY):

Calculate potential revenues with the savings calculator →

Conclusion

Protecting the purchasing power of money requires no complex strategies or risky investments. Moving your savings to a high-yield account or CD can often be done online and can quickly build inflation that will hit your money.

Important actions to take:

1. Move emergency funds to high savings For liquidity with better returns
2. Consider a money CD with a specific timeline Lock your guaranteed rate
3. Invest long-term money With a diverse portfolio for growth potential
4. Check your account every year To ensure competitive rates

You don’t need to constantly monitor inflation, but knowing both account yields and current inflation can help you maintain your wealth over time. The longer you wait, the more you will have purchasing power to succumb to invisible taxes of inflation.

Are you ready to earn more about your savings?

Compare high yield savings accounts →

View today’s best CD rates →