We are receiving multiple emails every day from BestCashCow's readers who are furious about the pace of falling savings rates, money market rates and short-term CD rates. While we are the most comprehensive and up-to-date source of these rates, we are not setting Fed policy or even having input into the rates at a single bank. So, we are sorry that you opened an account at HSBC when they were offering 1.60% APY two weeks ago only to learn that you were earning 1.01% APY by the time that you had it funded. But, as you are no doubt aware if you are paying attention to the news (not FOX news, but real news), there are people who are dealing with much greater hardships right now.

Here is what you can do with your cash going forward to try to protect yourself from savings rates that look poised to fall below 1%.

First, look at No Penalty CDs. We’ve recommended No Penalty CDs for years. They are a no lose situation since they lock in a rate of return, and allow you to cancel without a penalty anytime after one week. Today, they are being offered by at least 6 banks: Ally, Marcus, Purepoint, CIT, CitizensAccess and CFG Bank. An individual can protect their interest on up to $1.50 million in cash over the next years without going over FDIC limits. A couple can protect up to $3 million. See the rates on No Penalty CD and other special CD products here.

Second, consider 1-Year CDs. Rates are probably going lower as we lead up to the election. A 1.35% one-year CD is not attractive, but it is still better than zero. And, remember that as rates come down, so too do the penalties for early withdrawals as they are ordinarily set in terms of three-months or six-months interest. Some local banks and credit unions may be offering higher rates. You should check those as well.

Third, avoid the temptation to chase much higher rates in products where the return is not guaranteed. Anyone who ever invested in stocks like Teva, CenturyLink, GE or Kodak will tell you that dividend chasing is a fool’s game. And, chasing structured instruments that could yield high returns but could also yield zero while impairing your liquidity is also a fool’s game.

Fourth, recognize where we are. The Fed Funds rate is at zero and it could be there for a while. Earning over 1% on your money is still over 1% more than zero. And, it is important to keep your asset base growing. The same folks who were excited about online savings accounts earning 2.50% last year when Morgan Stanley or Bank of America were offering 1.50% should recognize that the same online savings accounts are still offering spreads just as worthwhile to pursue.

Fifth, think about earning AAdvantage miles through a Bask Bank account. If you believe that you are ever going to be traveling again, then this is a good time to open an account that pays you miles instead of interest. I wrote about Bask Bank several times here and here readers in the comment sections engaged in exercises of trying to determine the value before reaching the conclusion that the account was attractive when savings and CD alternatives were much higher. Now that those rates have come down and Bask Bank’s offer remains the same until June 30, the opportunity is even more attractive. $100,000 deposited for 1 year earns 100,000 miles. BestCashCow conservatively values these miles at 1.90 cents each, but I can still find redemptions in business class seats to Hawaii and Europe where the value is well over 6 cents a point. And, if you act before June 30, you will still be eligible for an additional 46,000 AAdvantage miles on the $100,000 balance over the next year in the form of a sign-up bonus, a feedback bonus and a balance bonus. An additional benefit is found in the fact that Bask Bank’s 1099 will only report the miles at 0.42 cents each.

Learn more about Bask Bank's AAdvantage Miles-earning account here.

Times are tough and may get tougher, but save on!

The Federal Reserve has left the Fed Funds rate at zero to 0.25%, and projected no plans to raise interest rates through 2022. The good news is that it is still not considering negative interest rates in the US.

It is projecting a 6.50% decline in US GDP in 2020.

The Fed sees inflation well below its 2% objective and it sees unemployment at extraordinarily high levels so there is no pressure whatsoever to raise rates. Meanwhile, it remains committed to using all sorts of tools involving its lending programs in order to avoid a collapse in the economy.

Against, this backdrop, it is very difficult to say that cash is exciting. It is safe, it is stable, and it is still going to be trading at face value plus interest if the market loses half of its value as this Coronavirus-induced economic crisis continues. But, compared with the performance of the stock market over the last several months, it is hard to make a compelling case for cash and holding large amounts of it carries the risk of a devaluation of your purchasing power. I suggested recently that folks might want to resist the temptation to go completely into cash, even as the economy deteriorates.

There is another temptation that I also suggest that folks resist and that is the temptation to give up on cash and accept zero returns. All major online banks are still offering yields of over 1%, and 1% is better than zero, especially when you factor in the value of compounding interest rates over time. We received notes from lots of folks who were excited about earning 2.50% instead of 2% this time last year, and while savings and money market accounts feel like trash now, it is just as important in this environment that your cash resources are earning as much they can. You can compare online savings rates here and you should also continue to check local savings rates where you live, here.

Savings alternatives that may preserve the value of your cash while giving you access to something else of value, instead of interest, could be particularly interesting to those whose primary goal is to preserve capital. Bask Bank is offering an account that pays interest in the form of American Airlines AAdvantage miles at 1 point per dollar on deposit per year. Bask Bank also offers bonuses that could total as much as 42,000 American AAdvantage points if you maintain a balance over $100,000 for over a year. Since these bonus are due to expire at the end of June, I think that this is a good time for anyone planning to travel again in the future to look at accumulating miles through this program. Learn more about Bask Bank's offer here.

While this remains a difficult time for savers, I’d encourage folks to look at remortgaging and home equity options, if they are at all inclined.

Following the stock market’s incredible collapse in March and subsequent recovery, my inbox has been inundated with emails from readers writing to tell me that they are now 90% to even 100% in cash.

These emails come from people young and old, rich and poor, optimistic in their tone and pessimistic in tone. Some include racist, conspiratorial rants as part of their justification. Others are more rational.

I am not 100% in cash or even close. I maintain a healthy portfolio of major pharmaceutical stocks and biotechs. I own major technology stocks that I have no intention of selling. But, outside of those sectors, my only exposure to equities is through Berkshire Hathaway.

Stock markets today are dramatically overvalued. The S&P is trading at a trailing P/E of 20x. While trailing earnings or even current earnings are not the only way to value a stock or an index, the other mechanisms take into account earnings growth and leverage. Earnings will be down dramatically across the board in 2020 and probably into 2021, and the market is highly leveraged. Therefore, there simply is no more favorable metric than the P/E ratio right now.

The problem with savings and money market accounts as a place to hang out is clear. The longer that the Federal Reserve maintains the target Fed funds rate at zero to 0.25% (or lower), the more likely we are to see savings rates fall. Over the last two weeks, virtually every major online bank lowered its savings rates by 20 basis points and it is increasingly difficult to get more than 1.30% on your savings.

Some have suggested that the outcome of the COVID-19 crisis will be a prolonged period of deflation in the US. If we do enter a period of deflation, cash could be the single best asset to hold since it will maintain its real value ($1 tomorrow will be worth more than $1 today and commercial banking will never take your money and give you back less).

I personally do not see asset deflation in an era where the Federal government will be unable to have a balanced budget and where leverage rates are likely to need to remain very high throughout the public and private sectors.

In an environment where prices are increasing by more than what you are earning in a savings account, maintaining your money in savings accounts may not be a reliable intermediate or long-term strategy for maintaining value and purchasing power.

Savings accounts are calming and are a great place to hang out for short periods of time when the economy is going through a massive transformation. The ability to earn a higher rate of return and maintain complete liquidity makes online savings accounts particularly interesting during this period. But, people need to think a little more creatively about maintaining the real value of their money and that may involve investing in commodities such as gold, real estate, some equities and short or long term CDs.