Saving money and earning interest can help keep you afloat through life's unexpected events and set you squarely on the path to a healthy financial future. Some ways to save are riskier than others, some earn higher interest and some are less flexible. But you don't have to settle on just one. Sometimes taking advantage of multiple ways to save and earn interest can help grow your savings even faster. Here's how.
1. Open a High-Yield Savings Account
High-yield savings accounts come with substantially higher interest rates than standard savings accounts—often well above 4% annual percentage yield (APY) in some cases. If you're building an emergency fund, saving for a down payment on a house or setting money aside for a large purchase, high-yield savings accounts can help you reach your goals.
Also, the best high-yield accounts usually have few or no additional costs, like minimum balance requirements, and are typically found online, making it easy to manage your money around the clock. Some banks may limit you to a specific number of withdrawals each month and have other requirements, however, so check the terms before opening a new account.
Find High-Yield Savings Accounts
2. Use a No-Fee or High-Yield Checking Account
Although a checking account is intended to be used to pay for everyday expenses, some accounts save you money by not charging fees. Other accounts, like high-yield checking accounts, actually pay interest on the money in your checking account. The best no-fee checking accounts have no or very few fees.
Sometimes if a bank calls a checking account "no-fee" it means the account will have no monthly maintenance fees, no minimum balance requirements or ATM out-of-network charges. However, they may charge other fees that can be waived if you meet certain requirements as outlined in your fee schedule.
High-yield checking accounts offer higher rates compared with standard checking accounts, which typically provide very little or no interest at all. They tend to offer lower rates than high-yield savings accounts, however, unless you carry a high minimum balance, such as $10,000 or more.
Like some standard checking accounts, high-yield checking accounts may have fees, which can depend on how you use your account. For example, the bank may charge an overdraft fee if you spend more than what's in your account at any given time, or a fee if you prefer to receive paper statements.
3. Earn a Bank Bonus
Similar to credit card intro bonuses, bank welcome bonuses are incentives traditional banks, credit unions and online banks use to attract new customers. These bonuses are usually one-time perks, and you'll likely need to meet certain requirements, like making a minimum deposit and maintaining a set amount in your account. Bonuses vary and can range from less than $100 to over $1,000. Some banks charge account fees but may also offer ways to waive these fees, which can be found in your account agreement.
4. Compare Interest Rates
Comparing interest rates is important to ensure you receive the most favorable terms. At the time of publication, savings rates vary from 0.37% to more than 4% for high-yield savings accounts.
Although not guaranteed, many online banks and credit unions offer better rates than some traditional banks while still offering many of the same services and financial products. That's why it's important to compare many financial institutions to ensure you find the best rates possible.
5. Open a CD
Traditional certificates of deposit (CDs) and high-yield CDs offer higher rates than some other savings vehicles to grow your savings. The tradeoff is less flexibility than savings, checking or money market accounts. Unlike savings accounts, most CDs require you to keep your money in the account for a set period of time, called the maturity date. If you withdraw your money early, you may pay a penalty.
The one exception is a no-penalty CD that lets you withdraw both principal and any interest earned beginning seven days after funding your account without paying an early withdrawal penalty. However, you can only withdraw the full balance early and may not make a partial withdrawal.
The Bottom Line
No matter your savings goals or where you choose to put your money, building an emergency fund, making a budget (and sticking to it) and reducing your expenses can all help you reach your savings goals faster. These moves can also help you build credit safely and without going deep into debt. Keep an eye on your credit with Experian's free credit monitoring service to prevent any future surprises.