Saving money is not just about accumulating funds, it’s also about making your money work for you. While traditional savings accounts offer minimal interest rates, there are other options that can help you earn more. In this article, we’ll explore six powerful ways to maximize your savings and boost your earnings.
1. High-Yield Savings Account (HYSA)
Traditional savings accounts may not provide significant returns on your money. However, high-yield savings accounts, like the Valley Direct High Yield Savings, offer much higher interest rates than standard savings accounts. With an annual percentage yield (APY) of 3.75%, you can earn substantially more on your savings. For example, depositing $1,000 in a high-yield savings account would yield $37.5, compared to just $1.9 in a traditional savings account.
2. Certificate of Deposit (CD)
A certificate of deposit is another option to earn higher interest on your savings. With a CD, you deposit a lump sum for a fixed term, ranging from 6 months to 5 years. During this time, the interest rate remains locked, providing predictability for your earnings. Banks like CIT offer competitive rates, up to 4.90% APY*. Keep in mind that withdrawing from a CD before the term ends may result in penalties, so it’s essential to consider your investment timeframe.
3. Money Market Account (MMA)
Money market accounts combine the benefits of a checking account with the potential to earn interest. For example, the Quontic Money Market Account offers an interest rate of 4.75%*, providing substantial growth for your savings. MMAs also offer the convenience of writing checks or using a debit card for transactions. However, keep in mind that MMA interest rates can fluctuate with the market, unlike CDs or high-yield savings accounts.
4. Bonds
Investing in bonds, such as U.S. Treasury or Savings bonds, allows you to lend money to governments or companies over a set period. Longer-term bonds typically offer higher returns. However, you must keep your money invested for the entire duration of the bond. Platforms like Public allow you to buy treasury bills for as little as $100 and track their yield over time. Bonds provide a stable and reliable way to earn interest, but they may limit access to your funds.
5. Rewards Checking Account
While checking accounts are not typically associated with earning interest, rewards checking accounts can offer a compelling option. Accounts like the Upgrade Rewards Checking account incentivize you to maintain a minimum balance or make monthly direct deposits by offering cash bonuses, cashback, or interest on your balance. With accounts like Axos Rewards Checking, you can even earn an APY similar to that of a high-yield savings account.
6. Bank Bonuses
Keep an eye out for bank bonuses offered to new customers. Switching to a new bank can potentially earn you a cash bonus upon opening an account. However, make sure to carefully read the terms and conditions, as some banks may charge fees if specific requirements, such as a minimum balance, are not met.
FAQs
Where should I put my savings?
The best place to put your savings depends on your individual goals and circumstances. If you want to maximize interest while maintaining access to your funds, consider high-interest savings accounts, CDs, or money market accounts. For long-term savings goals, a CD or bond may be a better choice.
Should I save money or pay off debt?
Paying off high-interest debt should be a priority. However, it’s also crucial to have savings for emergencies. Consulting a financial advisor can help you find the right balance between debt repayment and savings.
How can I make 10% interest in a year?
Earning a 10% interest rate in a year is challenging. Higher-yield options such as long-term stock market investments or real estate may provide the potential for higher returns. However, options like high-yield savings accounts and CDs are unlikely to yield such high rates.
How much interest does $10,000 earn in a year?
The amount of interest earned on $10,000 depends on the interest rate. With a 3% interest rate, you could earn around $300 in a year. It’s crucial to shop around for the highest available interest rates to maximize your earnings.
Supercharge your savings by exploring these six powerful strategies. Whether it’s a high-yield savings account, a certificate of deposit, or a rewards checking account, there are options to suit your financial goals. Visit Personal Finances Blog for more insightful articles and expert advice on managing your money.
*Interest rates current as of Dec. 2nd, 2023.