With the variety of different options to store and earn interest on your savings it can be difficult to know the best one to choose from.
Normal savings accounts don’t earn very much interest and therefore may not be the best option. With this in mind, here are four alternatives with significantly higher rates of return.
Online Savings Accounts
One alternative to the traditional savings account is a savings account with an online bank.
Online banks offer higher interest because they cost less to run then normal banks, which cost more due to having local office branches.
Money Market Account
The money put into a money marketing account is invested in things such as stocks and bonds.
The down side of money market accounts are minimum deposit, but they do offer higher interest rates then savings accounts.
Certificates of Deposit
Certificates of deposit (CDs) are a great place to store money you won’t need access to in the immediate future.
There is a minimum time frame normally between 6-12 months that you can deposit the money, however it is important to be sure that you won’t need the money before the minimum deadline as there is a penalty fee for withdrawing money before hand.
US Saving Bonds
A Bond is a bit like a loan where you buy government or corporate debt which they then pay interest on.
Bonds are considered a safe option as they are government controlled and covered by FDUI insurance.
Another advantage of US saving bonds is that, unlike interest from other accounts, they are not susceptible to taxation. However, bonds can take a while to mature.
Savings bonds are a whole new category in themselves, as there are a number of different types of savings bonds, all with their own advantages and disadvantages.