Inflation is down. Here's what that means for savings rates.

Persistent inflation has plagued U.S. consumers over the past two years. After reaching a 40-year high in 2022, it's remained elevated throughout 2023, leading the Federal Reserve to continue raising the federal funds rate in an attempt to combat it.

The good news is that these hikes seem to be working. According to the latest Consumer Price Index (CPI) report, inflation cooled in June, growing at an annual rate of 3%. That's the slowest pace we've seen since March 2021, bringing us closer to the Fed's target rate of 2%.

That doesn't mean we're out of the woods just yet, but it is a sign we're heading in the right direction. And for those looking to put aside money for the future, it means now is the time to get the most from still-high interest rates before they drop.

See today's savings rates here to find out how much you could be earning.

Higher inflation hurts the dollar's purchasing power, so it takes more money to buy the same goods and services. It also costs banks more to lend out money, so they raise savings account interest rates to attract new customers, whose deposits can improve their cash flow.

But when inflation rates drop, interest rates on savings accounts tend to fall too. Fortunately, lower inflation also means consumers' money goes further. Those who have put their savings on hold may be able to resume savings, and those who've been saving have more money to squirrel away.

It's also worth noting that the rate cooling we saw in June doesn't necessarily mean rates will fall significantly anytime in the near future. The Fed has signaled two more rate hikes are in store for 2023, with the soonest coming after its June 25-26 meeting. So, savers would benefit from taking advantage of rates while they're still relatively high.

View the most up-to-date savings rates here.

While we're nowhere near peak inflation anymore, savings rates are still high across the board. That makes now a great time to boost your balance by taking a couple of smart steps.

High-yield savings accounts offer interest rates up to 10 times higher than regular savings accounts (if not more). This can add up quickly, especially when overall savings rates are high. Some of the top savings accounts on the market offer rates up to 5.05% APY.

Savings account interest rates are variable, meaning they go up and down in keeping with the federal funds rate. By opening a high-yield savings account now, you can maximize your earnings from today's high rates for as long as possible.

See today's top savings accounts here.

Certificates of deposit (CDs) often have higher rates than even high-yield savings accounts. Today's top CDs offer rates as high as 5.48% APY. Better yet, your rate is locked in when you open the account, which means you'll earn that amount for the duration of the CD's term.

If lower inflation rates lead to lower interest rates, securing a higher CD rate now will keep your earnings high. If interest rates increase, you can take advantage of them by opening a short-term CD now and, when it matures, putting the funds into a new CD at a higher rate. You can also ladder multiple CDs with varying terms to maximize your earnings while providing you regular access to funds if needed.

See today's top CD accounts here.

Cooling inflation is good news for many consumers, including those seeking to grow their savings. It can give you wiggle room in your budget to put more money away for the future, and it's a sign that now is a good time to get the most from that money before interest rates fall. By opening a high-yield savings account or CD (or both) today, you can make full use of both of these advantages.