Saving money feels great. But what feels even better is earning interest on top of what you’ve already put away. It can almost feel like free money. But what’s the best way to earn a high interest rate? You will be glad to learn that there are actually four different ways to start enjoying higher interest earnings from your savings.
Open A High-Interest Or High-Yield Savings Account
Not all savings accounts are created equal. Many people are tempted to just open a standard bank account to deposit their savings, not realizing that this can be a mistake. Believe it or not, you can end up losing money this way. Most banks have fees attached to accounts, which they claim are necessary for them to provide the administrative service of managing your money. If your money is in a standard account, the balance may continue to increase as you deposit more – but look closer. You may be losing funds due to these fees. It could be small amounts, but over time this will add up. On top of that, you’re likely losing out to the rate of inflation, which means with each passing year the purchasing power of your savings decreases.
Instead, you would be much better off opening a high-interest or high-yield savings account. These accounts calculate a percentage of interest on top of your savings and allow you to earn even more money. Generally, the higher the interest rate, the better. But make sure you look closely at any fees attached to confirm that you are getting the best deal possible. Here at Cashero we offer a High-Yield Savings Account with an inflation-beating rate of up to 5% APY. Plus we never charge you unexpected fees.
Look At Checking Accounts With High Interest Rates
It is possible to earn a high-interest rate on your savings without even opening a savings account. Some checking accounts used for regular banking transactions come with high-interest rates. However, these often have special conditions, such as limiting the number of withdrawals or deposits you can make each month. But they are definitely worth looking into if you’re eager to earn more interest.
Consider A CD Ladder
This strategy is well-known to investors, though it’s rarely used by the average saver. In this context, a CD is a certificate of deposit issued by a bank when you deposit an amount of money for a predetermined amount of time at an agreed interest rate. Unlike savings accounts, you are committing to the bank holding the money for a set amount of time. A CD ladder is obtaining multiple CDs, often from different banks, for varying lengths of time. So, instead of putting all your savings into one CD, divide it between several. This gives you more access to your money and can help you earn higher interest rates. The downside is that you can’t take your money out when you feel like it, as it will be locked away until the CD reaches maturity.
Ditch Your Bank, Go For A Credit Union Or FinTech Company
Credit Unions and FinTech Companies are the not-so-hidden treasure of the investment world. Unlike banks, they do not have competing priorities and so can offer much higher rates of interest. Typically they are seen as an alternative route to traditional banking, but you can usually find all the features you’ll need to support your regular financial life on a day-to-day basis. Even better is that these companies are often built to be the antithesis of normal banks; meaning everything you don’t enjoy about banking, they’ve found a way to remove or streamline.
Summary
There are many ways you can earn more interest on your savings. Hopefully, this article has taught you more about the available options to build large annual savings, and guided you towards one that is right for you. Remember, no matter which method you choose to achieve more interest on your savings, take the time to do your research. Read the fine print and be sure that the strategy is right for you to get the results you want. Read more about how much money to save monthly.
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