finding a competitive interest rate on your emergency savings has become even more difficult amid record high inflation but there is good news the federal reserve is expected to begin raising interest rates when they do that will kick up the interest you can earn on your cash some accounts may be poised to see those increases first the online savings accounts that are currently paying competitive yields are likely to be the ones that remain competitive as interest rates go up said greg mcbride chief financial analyst at bankratecom you want to be where banks are already paying a premium to get your money he said thats as government data on inflation continues to set records one key inflation measure watched by the federal reserve the core personal consumption expenditures price index climbed 49 in december compared to the prior year in the fastest gain since september 1983 the consumer price index for january shot up 75 compared to a year ago another record gain dating back to february 1982 still savers who want better interest rates on their cash should be patient it will take a while before the gap between the federal reserves target 2 inflation rate and the interest rates on savings narrows many online savings account rates are currently around 050 according to bankrate it will likely take longer than 2022 to close the gap between inflation and interest rates mcbride said as that transition happens where you keep your emergency cash is going to be more important one advantage to online savings accounts is the flexibility they offer often there are no minimum balances or restrictions on how long you need to have the money deposited said ken tumin founder and editor of depositaccountscom the rates offered by traditional brickandmortar banks are typically below the national average annual percentage yield of 005 when choosing an online savings account its important to do your due diligence to make sure its a reputable financial institution also be sure to check for federal deposit insurance corporation or fdic coverage that will typically protect you for up to 250000 in deposits online savings accounts are typically the best place for sums of money you expect to need in one or two years tumin said if your time frame is longer you may be able to find a better return on your money elsewhere other options to choose from series i savings bonds are getting a lot of attention now due to the interest rate they pay which is currently an initial rate of 712 but there are limitations investors can only purchase up to 10000 in i bonds per calendar year moreover you cannot cash the money out in the first year and if you take your money out before five years you will lose three months worth of interest mcbride said the interest rate you earn is also subject to change every six months its good to supplement an emergency fund with i bonds but you probably should not depend totally on an i bond for an emergency fund tumin said