Move your money into a high-yield interest bearing account, and you could earn $100 or more in a year than you would with low rate options. Here is how you can earn more interest and grow your money faster.
1. Switch to a high-interest online savings account
Online banks have no branches, but they generally have lower fees and higher interest rates. Switching a portion of your savings balance to an online bank with high yields will line your pocket with some extra cash. For example, an account that earns 2% interest and has a $5,000 balance will earn about $100 after a year, compared to only $5 for an account with a 0.10% APY.
Compare three online savings options below, or see our list of the best high yield online savings accounts.
2. Sign up for a high-yield checking account
Some checking accounts have interest rates that are on par with quality savings accounts. Be aware that interest-bearing checking accounts often have hoops to jump through to qualify for the interest, such as linking direct deposit or using a debit card a certain number of times. Avoid accounts with monthly fees so they don’t cut into your earnings.
» Ready to browse some options? See interest-bearing checking accounts
3. Build a CD ladder
With a “CD ladder,” you divide up your money and put it into several CDs with different term lengths. That way you have greater access to your money but still get the highest CD rates.
» Ready to explore? Here are the highest CD rates of the month
For example, rather than put $10,000 into a one-year CD that you renew every year, you could divide it into five investments of $2,000. You’d then open a one-year CD, a two-year CD, a three-year CD, and so on. After a year, when your first CD matures, you can put that first $2,000 into a new five-year certificate. As each CD matures each year, you’ll repeat the process.
Since five-year CDs have higher APYs, you’ll get good rates, while still keeping your cash accessible.
» Need more detail? Read our explanation on CD ladders
4. Join a credit union
Credit unions often have slightly higher average rates on interest bearing accounts than traditional banks. According to the National Credit Union Administration, credit unions were paying an average of 2.42% on five-year CDs as of March 2019, compared with 1.92% at banks. Contact your local credit union for rates, or browse our list of best credit unions.
Regardless of whether interest rates stay relatively flat or slowly rise, it’s always a good idea to shop around for accounts with the highest interest rates.
How to beat the average savings account interest rate
The national average for regular savings accounts is 0.09% APY. But you can build your savings faster if you switch to a high-yield option, including the ones offered by online banks.
Rates may still not be as high as you might like — a 5% interest savings account, for example, is unlikely — but you will be able to grow your money in a safe interest-bearing account that earns much more than average.