In today’s economy, every penny counts. If you’re leaving your money in a traditional savings account earning close to zero interest, you’re essentially losing money to inflation. The good news? You can earn up to 5% interest on your cash with safe and easy investment options. In this article, we’ll walk you through the best choices available today to maximize your earnings without taking unnecessary risks.
Why Your Money Should Work for You
If your cash is sitting idle in a checking account, you are missing out on easy passive income. Inflation reduces the purchasing power of your money over time, so earning interest is crucial to keeping up. Thankfully, you don’t need to take big risks to earn a solid return on your savings.
Safe & Easy Ways to Earn Up to 5% on Your Cash
1. High-Yield Savings Accounts (HYSA)
Interest Rate: 4% – 5% APY
Liquidity: Highly liquid, withdrawals anytime
Risk Level: None (FDIC insured up to $250,000)
High-Yield Savings Accounts (HYSAs) are one of the easiest ways to earn interest on your money. Unlike regular savings accounts, these accounts offer higher interest rates because they are mostly offered by online banks with lower overhead costs.
Best Options
- Ally Bank: 4.35% APY
- Marcus by Goldman Sachs: 4.40% APY
- Discover Bank: 4.30% APY
2. Money Market Accounts (MMAs)
Interest Rate: 3.5% – 5% APY
Liquidity: High, but may have withdrawal limits
Risk Level: Low (FDIC insured up to $250,000)
A Money Market Account (MMA) is similar to a savings account but often offers higher interest rates and limited check-writing privileges. These are great for those who want easy access to their funds while still earning decent interest.
Best Options
- Capital One 360 Money Market: 4.30% APY
- Synchrony Bank Money Market: 4.50% APY
3. Certificates of Deposit (CDs)
Interest Rate: 4.5% – 5.5% APY
Liquidity: Locked for a set term
Risk Level: None (FDIC insured up to $250,000)
Certificates of Deposit (CDs) allow you to lock in a fixed interest rate for a set period, ranging from 3 months to 5 years. Longer terms typically offer higher interest rates.
Best Options
- CIT Bank 1-Year CD: 5.00% APY
- Barclays 12-Month CD: 4.90% APY
4. Treasury Bonds & I Bonds
Interest Rate: Up to 6.89% (varies)
Liquidity: 1-year minimum lock-in for I Bonds
Risk Level: Very low (Government-backed)
U.S. Treasury securities, including I Bonds and Treasury Bills, are among the safest investments because they are backed by the U.S. government. I Bonds adjust for inflation, making them great for long-term savings.
Where to Buy
- TreasuryDirect.gov
- Major banks and brokerage firms
5. High-Yield Checking Accounts
Interest Rate: 2% – 5% APY
Liquidity: Fully liquid
Risk Level: None (FDIC insured)
Some credit unions and online banks offer high-interest checking accounts that can earn as much as 5% APY. However, they often require you to meet conditions like making a set number of debit transactions per month.
Best Options
- Consumers Credit Union Rewards Checking: 5.00% APY
- Lake Michigan Credit Union Max Checking: 3.00% APY
(FAQs)
1. Is my money safe in these accounts?
Yes! As long as you choose FDIC-insured banks or government-backed bonds, your money is protected up to $250,000 per account holder.
2. Which option is best for emergency savings?
A High-Yield Savings Account or Money Market Account is best for easy access and safety.
3. Can I really earn 5% on my savings?
Yes! By choosing the right CD, HYSA, or I Bond, you can earn up to 5% or more with minimal risk.
