What to do with your vacation savings if you want your cash to keep growing while you're quarantined at home

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• As the stock market has tumbled, the Fed has slashed interest rates to near zero in an effort to boost the economy.
• Those cuts have meant that APYs on high-yield savings accounts have plummeted.
• If you've been saving for a vacation and counting on the interest earned on your cash, you may be wondering if you should move it elsewhere to earn more.
• For most people, leaving your money alone is the best choice. But if you have a longer timeline, you could put into a high-yield CD, change savings accounts, or even invest it if you won't need the money for a long time.
• Find out who has the best high-yield savings account rate right now »

As the stock market has plunged over the last month in response to fears about the coronavirus outbreak, the Fed has slashed interest rates in an effort to boost the economy and get markets moving again.

That may be beneficial for you if you're looking to borrow money or refinance your mortgage, but if you've been counting on the interest earned in your high-yield savings account, the cuts probably weren't as attractive.

Since banks and financial institutions follow the Fed's lead, interest rates on high-yield savings accounts have dropped to new lows. If you've been socking away cash for your next vacation (whenever that may be) you may be wondering what to do with vacation savings that are suddenly sitting idle in high-yield savings accounts with rapidly dropping rates.

With much of the country - and the world - in quarantine, it's hard to know when travel will be feasible again, so what should you do with your funds in the meantime to make the most of that liquid cash?

There are a few options on the table to make sure you get the most bang for your buck.

Move your funds to a better savings account

With the Fed cutting rates to near-zero, it's likely that you're seeing the interest rate on your high-yield savings account (HYSA) follow suit. In January, it wasn't uncommon to see a 1.90% APY, but just a few months later, many are hovering closer to 1.50% or much lower.

We love an HYSA as a spot to stash vacation savings until you're ready to use them, so now might be the right moment to look around for one with better rates.

It is important to note, of course, that interest rates are fickle friends even in the best of times, and with all the uncertainty in the air right now, they're sure to fluctuate even more. So try not to get in the habit of moving your savings every time you spot a higher interest rate. Do your research, find an institution and an account that works for you, and give your cash a chance to grow uninterrupted.

Consider a CD

A savings account is always a great option for funds you need handy at a moment's notice, like an emergency fund. But when it comes to vacation planning, you tend to have a little more flexibility.

So given that there's no way to know how long it will be until travel is encouraged again, now might be the perfect opportunity to consider a certificate of deposit, or CD, for your vacation savings.

What's great about a CD is that it allows you to lock down an interest rate for guaranteed growth over a set period of time - ranging from months to years. In typical circumstances, the longer the time frame, the higher the interest rate on offer, making it a great option for those planning a trip for the following year.

The trade-off, of course, is that you can't touch your money before its maturity date without incurring a hefty penalty, so make absolutely certain of your budget before you commit to that deposit.

Investing it

When considering whether to invest your vacation savings, you again need to ask yourself about your timeline. Moments when the market is suffering are excellent opportunities to purchase reliable investments, or to boost your retirement contributions. (Especially for young investors who still have a lot of runway left before retirement.)

But even though, historically, every downturn in the market has eventually been followed by an uptick, the key word there is "eventually" - there's no way to know when or how quickly your investments will recover.

If, for example, you knew your next vacation was years down the line, it might make sense to invest your savings and hope they grow. But if you're hoping to head somewhere tropical as soon as the quarantine is lifted, investing your cash now is probably too risky of a proposition.

No matter where you stash your vacation savings, try not to let the market influence you. The goals you had before the pandemic are just as sound now as they were before the markets began suffering, so there's no need to change them on a whim.

As always, take your time with decisions, stay within your vacation budget, and wait to schedule anything until you're absolutely certain it's safe.

• More savings and retirement coverage
• How to retire early
• The best high-yield savings accounts right now
• The banks with the best CD rates
• When to save money in high-yield savings

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