Keeping your money in a savings account ensures that you have easy and free access to your cash. However, it’s challenging to build wealth with the low interest rates offered today.
If you want to make more money on your savings, there are several low-risk ways to earn more interest. These strategies can help you achieve your financial goals faster.
This is a sponsored post by CIT Bank, a division of First Citizens Bank & Trust Company. We only partner with brands that have a good reputation and that we believe are helpful to our readers.
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How to Earn More Interest on Your Savings
It’s time to put your savings to work. Here are some of the top ways that you can get free money from your extra cash.
1. High-Interest Savings Accounts
A high-yield savings account lets you earn one of the best interest rates without charging fees or penalties.
You can get a competitive ongoing interest rate, and you won’t pay early redemption fees like other high-yield investments.
As a bonus, you’re also far less likely to pay a monthly service fee or have to maintain a minimum account balance. This differs from other banking options.
Since interest rates are currently increasing, savings accounts may end up offering higher ongoing interest rates than locking in today’s rates for a long-term bond or CD.
For example, a CIT Bank Savings Connect account can be one of your best options to earn a competitive rate that is 15 times higher than the national average1. Plus, you can avoid traditional banking fees.
Some of the best Savings Connect features include:
- Earn 3.60% APY2 on your entire saving balance (as of November 30, 2022)
- Daily compounding interest
- No account opening or ongoing monthly fees
- Up to $30 in monthly reimbursements for ATM fees charged by other banks
- Minimum $100 opening deposit
CIT Bank is a division of First Citizens Bank & Trust Company, Member FDIC3.
The CIT Savings Connect program also gives you access to a CIT Bank eChecking account. This free online checking account easily links with your Savings Connect account to transfer funds, mobile deposit checks and earn more interest.
CIT Bank doesn’t charge monthly service fees for any banking account. The platform also offers competitive interest rates for your entire account balance.
This type of account is ideal when you need maximum liquidity.
High-Interest Savings Accounts vs. Traditional Savings Accounts
Why not just keep your money in a traditional savings account from a local bank?
Brick-and-mortar savings accounts usually require a higher minimum balance to waive a monthly service fee.
But, more importantly, the interest rates are paltry and are usually around 0.06%. That’s just a fraction of the high-yield that CIT Bank Savings Connect offers at 3.60% APY.
The bottom line is that high-yield savings accounts earn more interest and are less likely to charge maintenance fees. However, they are online-only without local branch access and usually don’t offer signup bonuses.
2. Bank Bonuses
If you are considering opening a new bank account, bank promotions can be an easy way to earn cash rewards. Most offers let you earn between $50 and $300 in bonus cash when you complete certain activities.
Typically, you’ll need to open a new checking or savings account. Then, you’ll have to meet specific offer requirements.
These requirements can include:
- Setting up direct deposit
- Maintaining a minimum balance for a specific time period
- Completing certain spending activities
Your bonus income is taxable, just like any interest you earn from a savings account. However, these one-time bonuses can be an easy way to exceed your annual interest income.
The offer conditions differ by bank and account type. For example, savings account bonuses generally require you to maintain a certain amount of money in your account for a specified period of time.
Checking account bonuses are more common. At a minimum, you will likely need to receive qualifying direct deposits. You may also need to complete a certain number of debit card purchases.
Physical banks with low interest rates are more likely to offer these bonuses. The upfront bonus cash will likely be more than you will earn in annual interest.
You can search for offers online. It’s also possible to receive invitation codes by email or physical mail. These personalized mailbox money offers can be more valuable than what’s available to the general public.
When you are comparing various offer terms and conditions to decide which bonus is best for you, watch out for account service fees. See if there’s a way to waive these charges to avoid losing some of your bonus cash.
3. CD Ladders
Bank certificates of deposit (CDs) let you earn a fixed interest rate for a specified time period. These accounts are less risky than bonds. Additionally, they are FDIC-insured.
CDs may have higher rates than traditional savings accounts since you’re pledging your cash for a specific investment term.
Unlike savings accounts that have low or no deposit requirements, bank CDs usually require a $500 or $1,000 minimum balance.
Another downside is that most term CDs have an early withdrawal penalty that forfeits several months of interest income. As a result, CDs aren’t the best place to store cash that you might need instant access to.
That said, you may like CDs as a long-term income idea if you want to avoid the variable yields of savings accounts that could potentially go lower.
However, it’s important to note that future savings account yields might have a higher annual percentage yield (APY) than a long-term CD in a rising rates environment.
Sadly, many existing CDs won’t increase your APY if new CDs with a similar term offer a higher APY.
CD ladders are an effective strategy to combat these downsides. They help you earn the best rates and allow you to access your money more easily.
To create a CD ladder, you buy several CDs with different maturity dates.
For example, you could buy four CDs with the following terms:
As each one matures, you reinvest your proceeds into a new term. This way, you continually have a maturing CD as well as exposure to various terms and interest rates.
Plus, if you need access to cash, your money won’t be tied up in just one CD. If your ladder maturity dates are staggered, you’ll have opportunities to access money regularly as your CDs come due.
4. Money Market Accounts
Money market accounts blend the best benefits of high-interest savings accounts and checking accounts.
For example, the same account earns interest on your deposits and lets you make withdrawals with a debit card or money-sending apps. Some accounts may even let you write checks or enroll in online bill pay.
Furthermore, these accounts have FDIC insurance. This is similar to savings, checking and CD accounts.
While a money market account offers more flexibility than online savings accounts when it comes to accessing your funds, the interest rates may not be as high.
Money market accounts can be an excellent place for your emergency fund or a specific savings goal that requires periodic withdrawals.
Since bank account interest rates continually fluctuate, you may consider having this account and a high-yield savings account. Then, you can shuffle funds between accounts to receive a better rate.
Before opening new accounts or transferring cash, pay attention to the account minimums. These accounts can require higher balances than a high-yield savings account.
Also, money market accounts usually don’t offer new member bonuses. Nevertheless, the competitive ongoing interest rate can help you earn more long-term than a traditional savings account with a one-time promotion.
5. Rewards Checking Accounts
Rewards checking accounts can pay interest rates that are potentially higher than high-yield savings accounts. However, you usually need to complete several monthly activities to earn the highest rates.
The requirements vary by the bank but can include:
- Receiving qualifying direct deposits
- Making a minimum number of debit card transactions
- Maintaining a minimum ongoing account balance
Depending on the bank, you could earn between 1% and 3% APY on your account balance by satisfying these requirements.
What if you want to avoid the hassle of completing the minimum activities each month? You can find free checking accounts that award interest on your account balance without any required activities.
However, interest-bearing checking accounts almost always have lower yields than a high-interest checking account.
In addition to awarding interest, you might also be able to earn cash back on debit card purchases. While you can effortlessly earn rewards, these accounts usually have monthly limits on interest income and debit card rewards.
You may transfer the cash you don’t need for the month to a high-yield savings or money market account. This practice can help you earn more interest and avoid overspending.
While many rewards checking accounts are free, some premium accounts require a monthly fee. If so, determine if the additional perks are worth the cost.
Similar to high-interest savings accounts, these accounts usually don’t offer new member bank promotions. Thankfully, it’s easier to get more interest each month and avoid monthly service fees to make up for this.
There are multiple ways you can get more interest on your savings with minimal risk and no fees. You can dabble in several of these ideas to earn the best rates for your short-term and long-term money goals.
While these strategies may not have the same long-term income potential as investing in stocks, you can make your cash reserves more productive.
Better yet, you can also easily withdraw your cash for expenses or other investment ideas for monthly income.
1Based on comparison to the national average Annual Percentage Yield (APY) on savings accounts as published in the FDIC Weekly National Rates and Rate Caps, accurate as of April 18, 2022.
2APY — Annual Percentage Yield is accurate as of November 30, 2022. Interest Rates for the Savings Connect Account are variable and may change at any time without notice. The minimum to open a Savings Connect account is $100. Fees could reduce earnings on the account. A Qualifying eChecking account must be opened concurrently with the Savings Connect account and the ownership of both accounts must be identical. The minimum to open an eChecking account is $100. Both accounts must be funded within 30 days of account opening
3“First-Citizens Bank & Trust Company and its CIT Bank division are the same FDIC-Insured Institution. Deposits held under each name are not separately insured but are combined to determine whether a depositor has exceeded the $250,000 federal insurance deposit limit, per depositor for each ownership category. For purposes of calculating aggregate deposits, you should include deposits held in First-Citizens Bank & Trust Company and CIT Bank.”