How to Stash and Grow Cash in Good Times or Bad

Margarette Burnette
By Margarette Burnette 
Edited by Amy Hubbard

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In the decade since the financial crisis put nearly 9 million Americans out of work, one thing has become clear: It’s always a good idea to have money set aside.

Just after the Great Recession, Americans began stowing away more cash. But in the last few years, according to the U.S. Bureau of Economic Analysis, the savings rate has fallen nearly to pre-recession lows, and many of us are back to our old habits.

» Are we 10 years wiser? See more tips on preparing -- and prospering

Those who continue to save are being rewarded. Funds in a bank or credit union savings account are earning a growing amount of interest — with some approaching 2% yields on savings accounts. That’s quite a turnaround from 10 years ago, when Fed benchmark rates were close to zero.

The money is backed by the government and can be a lifesaver if a recession puts you out of work. If your savings balance could use a boost, here are three basics that will grow your money right now, whether the stock market is going up or down.

1. Minimize bank fees

Regulations put in place after the 2008 bank failures caused many banks to increase their fees. Some of those regulations have been rolled back, but at some banks the fees remain.

If your bank is stuck in the "early 2010s" and charging you money each month, now could be a good time to make a switch. Today, there are many banks and credit unions — including online institutions — that let you open an account with no monthly service fee or minimum balance requirement.

Say you have a savings account at a bank that charges $10 a month and waives that fee only if your balance is at least $500. You start out with enough to waive the fee but then make a withdrawal that dips your balance below the minimum. Not counting the withdrawal, you’d be losing money, as much as $120 a year (10 bucks a month x 12). But if you put your money in a free high-yield savings account with no minimum, you’d keep your balance intact and earn close to 2% in interest.

2. Magnify your balance

With a high-yield savings account, you can increase your bank balance over time even without making a deposit.

You might want to skip the big traditional banks. Online banks tend to have better rates (in addition to the lower fees). The trade-off is, you’ll have to do most of your banking on a computer or mobile app, not at a bank branch. Online banks weren’t widely available a decade ago, but they’re a solid option today.

3. Make it a habit

A habit is something you do without much thought. A great habit for saving money is to set up automatic transfers from your checking account to savings. Once you set it, you can practically forget it. There are no deposit slips to fill out, branches to visit or cash withdrawals required. You can just check your balance online from time to time and watch your money build.

By following these few basic steps, you’ll be able to put away money for when you need it, building an emergency fund (see how much to save for an emergency), no matter what the stock market does.

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