If you have savings and aren’t willing to make a risky, or long-term investment, then you’re probably frustrated by how little you can make off of interest. Savings interest rates have endured almost a decade without offering anything for consumers to sink their teeth into. Over that time, you’d be lucky if you found a CD or savings account with an interest rate above 1%. Since this inconvenient truth exists, and Federal Reserve rate hikes have yet to affect savings rates, we’ve come up with 7 low-risk ways you can make money from your savings.
1. Take advantage of incentives at account opening – Just about all of the major banks offer some sort of cash incentive account opening. Chase has been sending mailers for $300 cash for opening a checking account, and another $200 if you bring in $15,000 to deposit in a new savings account. That’s a great incentive! Just remember that you’ll be subject to direct deposit requirements. Also, keep in mind that your $15,000 isn’t going to earn much interest.
2. Ask your employer – Many larger employers partner with banks to offer great incentives to their employees for opening their account there.
3. CD’s – In 2015, when the Federal Reserve raised rates for the first time in almost a decade, something peculiar happened: loan rates went up, and savings rates stayed the same. While this isn’t the best news for consumers, there are a few things you can do to take advantage of the best interest rates out there. Many times, this comes in the form of Certificates of Deposit. CD’s generally offer the highest savings interest rates on the market, but typically penalize account holders for taking out money before the CD matures. With that in mind, take a look at the following:
- Open multiple accounts – Just about all financial institutions offer some sort of rewards for bringing them your business. Current customers are often offered small increases in interest rates based on their relationship with the bank or credit union. Open your CD where your checking and savings account are, or open multiple CDs.
- CD Laddering – This simple but effective method is designed for low-interest rates. Open four CD’s of the same amount and stagger them so one matures every 3, 6, or 12 months. You’ll get consistent payouts of interest, and if better interest rates come along, you’ll always be in a position to take advantage.
- Bump up your rate – Many Financial Institutions offer CD’s with a “bump up” or “opt up” option. If you choose a long-term CD, this is a great safeguard if rates go up during your term. You’ll earn the highest interest possible while still being able to take advantage of higher rates down the road.
4. Internet Banks – We know that many will have reservations about putting their hard-earned dollars into deposit accounts at internet banks. But if you do decide to go this route, you will be rewarded for doing so. Internet banks have far less overhead than banks with brick-and-mortar branches. With this advantage, they typically offer higher interest rates on Money Market accounts. Just make sure the internet bank is FDIC-insured, and be certain to do a Google search before establishing a relationship.
tool – Check out this site to monitor which financial institutions are offering the best interest rates on Money Market accounts in the nation.
5. Use your emergency savings – Strong personal finance principles dictate that keeping a 6-month reserve of savings is essential to financial stability. It safeguards against you losing your job, your roof caving in or something unforeseen. This money is not meant to be invested, but you should be trying to earn interest on this money. It’s also important to keep this money accessible for, well, an emergency. Money Market and other savings accounts allow up to 6 withdrawals per month. That should be more than enough if you need to dip into your savings.
6. High Yield Checking Accounts – This is going to be the most complicated method in our discussion. The reason is that High Yield Checking Accounts carry with them complex requirements to qualify for their high rates. If you can meet these requirements, you could earn interest rates of up to 3-5%. That’s an amazing return! But read the fine print, because that’s where it gets complicated:
- With Consumer Credit Union (IL) Free Rewards Checking, customers can earn up to 4.59% on their first $20,000 of deposit balance. After that, interest rates are tiered by 1/10 of a percent, which means customers are earning close to nothing for their balance above $20,000. Customers will also have to spend at least $1000 per statement cycle and make 12 or more different purchases. Not to mention, they’ll also have to use one of the credit union’s credit cards. But they don’t have a minimum balance requirement, and they’ll refund fees for withdrawing funds from out of network ATM’s.
tool – To find the best rates on High Yield Checking Accounts you’ll need this tool to shop around.
7. Buy Savings Bonds – Savings Bonds have traditionally been the safest, and thus the lowest yield investment for consumers. But since low yield has been the name of the game in recent years, Savings Bonds deserve our attention. EE bonds pay a puny .5% interest (below inflation), but you will double your money (after 20 years). I bonds are a better source of earning interest and so we’ll take a closer look at them.
- I Bonds bought before October 31, 2017, will pay 1.96% interest for your first six months of ownership. You can buy an I bond for as little as $25, and as much as $10,000 for a single bond. I bonds include a fixed interest rate that is competitive and a feature that adjusts the interest based on inflation. That’s great news! Savvy consumers know that when it comes to savings, inflation is your biggest enemy. It’s nice to know that there’s a product that addresses this problem. Just don’t touch the money for 5 years to avoid a penalty equal to 3 months' worth of interest.
tool – Use this tool to open a treasury account today to purchase I bonds for yourself, or gift to others.