When you work hard for your money, it can be frustrating to see it sitting idle in the bank earning little to no interest.
Getting your money to work harder for you can sometimes be as simple as finding a different savings account.
In fact, getting your money to work harder for you can sometimes be as simple as finding a different type of checking or saving account.
If you’re willing to take some risk–for potentially higher rewards–you may also want to consider investing some of your money in order to help build wealth over the long term.
Read on for some simple ways you may be able to start earning more interest than a standard savings or checking account.
High-Interest Savings Accounts
Some banks offer special, high-interest or high-yield savings accounts that can offer higher rates than traditional savings accounts, yet still offer fairly easy access to your money.
Typically, these accounts limit you to six withdrawals or transfers per month per Federal Reserve requirements. While this rule is not currently being enforced due to the coronavirus pandemic, some banks will still charge a fee so be sure to check with your bank.
You may also want to look at high-interest savings offerings at online-only banks.
Because these institutions tend to have lower operating costs than brick-and-mortar banks, they often offer rates that are higher than traditional banks. They may also be less likely to charge monthly fees.
You may also want to keep your eyes open for high-yield savings accounts that offer a sign-up bonus or an interest rate bonus. These incentives can boost your earnings, though you may have to maintain a high minimum balance in the account to earn the higher rate.
A high-yield savings account can be a great place to build an emergency fund or save for a vacation or home repair while providing safety and liquidity.
Ready for a Better Banking Experience?
Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!
Rewards Checking Accounts
While checking accounts are traditionally used for storing money that you use everyday and to pay bills, rather than savings, some banks offer rewards checking accounts, which may offer higher interest rates than traditional checking and savings accounts.
However, there may be some restrictions. For instance, the balance that earns the elevated rate may be limited, and you may have to meet certain direct deposit or debit card transaction requirements each month to earn the higher rate.
Some banks also offer cash bonuses to customers who open new checking accounts. While this may also come with some requirements, such as setting up direct deposit and/or keeping your account open for a certain number of months to earn the bonus, it can be another good way to increase the income you earn on your bank deposits.
Like other checking accounts, rewards checking accounts are highly liquid and typically come with check-writing privileges, ATM access, and debit cards. Plus, deposits can be withdrawn at any time.
If you’re considering a rewards checking account, however, you may want to first make sure that the requirements to earn the elevated interest rate are easy for you to meet. Otherwise, you could potentially earn less interest than a standard savings account.
Credit Unions
Credit unions, unlike banks, are owned by the people (or members) who hold accounts at the credit union. Because of this, these financial institutions work for the benefit of account holders instead of shareholders.
In some cases, that can translate into lower fees, better account perks, and higher interest rates. To join a credit union, you typically need to live or work in a certain geographic area or work for a certain employer.
If you have a credit union near you, you may want to check the rates it offers and see if you can get a good deal.
Money Market Accounts
A money market account is a type of deposit account that often requires a higher minimum balance to open than a standard savings account and typically earns a higher interest rate.
Some money market accounts also come with a debit card or checks (which you generally won’t find with savings accounts), but financial institutions may require that they not be used more than six times per month. Some will charge a fee if you go over that number.
If you are looking to earn more interest than a standard savings account without meeting the transaction requirements of a rewards checking account, money market accounts can be worth considering.
Before opening an account, however, it can be a good idea to ask about fees, such as monthly account fees and penalties.
Certificates of Deposit
Certificates of deposit (CDs) typically offer higher interest rates than traditional savings accounts in exchange for reduced withdrawal flexibility.
When you put money in a CD, you have to agree to leave the money in the account for a set period of time, known as the term. If you withdraw your deposit before the term expires, you’ll have to pay an early withdrawal penalty.
One benefit of CDs is that you lock in the interest rate when you open the CD. Even if market rates drop, you’ll keep earning the same rate. On the other hand, if rates rise, you’ll be stuck earning the lower rate until the CD matures.
One way to work around this is to open several CDs that mature at different times, a technique known as CD laddering. Having a mix of short- and long-term CDs allows you to take advantage of higher interest rates but still have the flexibility to take advantage of higher rates in the future.
A CD ladder also helps with the lack of liquidity that comes with CDs. With a CD ladder, you can take advantage of the higher rates that CDs may offer without tying up your entire savings balance for multiple years.
Other Ways to Make Your Money Work For You
If you’re planning to park your cash for at least five years or so, and you are willing to take some risk, you may want to consider investing your money in the market.
While an investment might generate a higher return, all investments come with the risk that you could lose some or all of your money.
You can better weather this risk by investing for the long term, which essentially means only investing savings that you would not likely need to touch when the market is down.
There are a variety of ways to start investing. If your employer offers a 401(k), that can be one of the easiest ways to start investing. Another option for retirement is an individual retirement account (IRA).
You could also open a brokerage account for financial goals outside of retirement. This is a taxed account, typically opened with a brokerage firm, that allows you to buy and sell investments like stocks, bonds, and mutual funds.
If you’re ready to start investing, you may want to speak with a qualified financial advisor who can help you establish your savings goals and risk tolerance and help you develop a personalized investment strategy.
The Takeaway
If you’re looking to make more interest on your money, you may be able to increase returns by opening a high-yield account at a traditional bank, online bank, or credit union.
Other options that may pay more than you’re earning now include money market accounts and CDs.
Looking for Something Different?
You may also want to consider opening up a checking and savings account, such as SoFi Checking and Savings®.
With SoFi Checking and Savings, you can earn a competitive interest rate, spend, and save all in one place. Plus, there are no account or minimum balance fees, and withdrawing cash is fee-free at 55,000+ ATMs worldwide
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
SOCO421041