How to Earn More Interest: Strategies for Maximizing Returns

• Search online banks
• Ask your bank for an increase in your rate
• Consider switching banks
• Buy savings bonds
• Build a CD ladder
• FAQs

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• High-yield savings accounts and money market accounts pay more interest than traditional savings accounts.
• Some banks have higher interest rates than others, so you might earn more by switching.
• Buying savings bonds or building a CD ladder also might be worth considering.

Keeping your money in a place that earns interest can help grow your savings. But some accounts pay more interest than others.

If you're ready to take charge of your savings, we cover five ways to increase your interest earnings.

1. Search online bank for a high-yield savings account or money market account

According to the FDIC, the national average rate interest rate on savings accounts typically falls below 1%. However, several financial institutions pay much more than the national rate.

Jerel Butler, CFP® professional and financial planner at Zenith Wealth Partners suggests looking at online financial institutions for competitive interest rates on savings accounts.

"It's a little bit tricky with inflation going on," Butler notes. "The best savings option for a typical savings account is an online savings account."

The best high-yield savings accounts for maximum interest pay significantly higher than average savings rates, with the most competitive options paying 6.17% APY.

If you're interested in exploring other options, the best money market accounts also offer higher interest rates than traditional savings accounts. A money market account is similar to a regular savings account, but it may have a tiered interest rate system or more account accessibility through the form of a debit card, ATM card, or paper checks.

Quick tip: If you'd like to see how much interest you'll earn over time on a specific account, you can a compound interest calculator. Most interest-earning bank accounts compound interest daily, monthly, or quarterly. You can contact a bank's customer support if you don't know how frequently bank interest is compounded.

2. Ask your bank for an increase in your savings rate

If savings account interest rates are rising at other banks, Maggie Gomez, CFP® professional and owner of Money with Maggie, suggests asking your bank for an increase in the current rate you receive. 

Gomez explains some financial institutions won't immediately deliver a higher rate unless consumers get proactive. "Later, to be more competitive, they'll increase their rates more publicly, but I think it'll be really slow," Gomez adds.

The Federal Reserve's decisions impact savings account interest rates. When the Fed raises the federal funds rate, savings account rates go up, too. If the Fed cuts rates, savings account rates start to drop.

Savings account interest rates have remained competitive in 2024 because the Fed raised the federal funds rate several times throughout 2023. However, the savings rate forecast for 2024 shows that savings account rates will likely go down sometime in 2024.

3. Consider switching banks if the rate is worth it

Butler says you should also take the time to explore other financial institutions and compare different savings accounts. (We keep a running list of the best banks.)

"This is a great chance to take advantage of the rising interest rate market, and you may be able to take advantage of a welcome bonus at another bank," adds Butler. "A lot of banks — as a result of the higher interest rates — are running special promotions, too."

If you find a specific account that provides more compelling offers than your current bank, you might consider switching institutions. 

4. Buy savings bonds

Savings bonds are federally issued debt securities. Lindsey Bell, chief markets and money strategist for Ally, says federally issued bonds are a safe investment option, although there are a couple of things to keep in mind. 

"There's a limit on what you can invest in those. They are also probably a little more volatile than a CD or savings account, so you have to take that into account," explains Bell. 

Quick tip: If you are comfortable taking more risks with your money, you might consider investing in the stock market instead of keeping your money in low-risk accounts. Keep in mind investing in high-risk investments means you could potentially lose money. Experts recommend investing money for long-term goals and saving money for short-term goals.

5. Build a CD ladder with short-term CDs if you find a competitive rate

Butler says building a CD ladder might be ideal if you find a competitive rate and are generally risk-averse. However, if you're not risk-averse, Butler adds there are more options you should consider first.

CD ladders offer a way to take advantage of the best CD rates. Instead of depositing all your money into a single CD and locking your deposits for a set time, you'll split your savings into a mix of term lengths.

Earning interest on money FAQs

If you want to safely earn interest on your money without taking on too much risk, look for high-interest bank accounts federally insured by the FDIC or NCUA. You also might find federally issued savings bonds appealing.

If you decide to seek investment options that offer more interest, keep in mind that you could risk losing money. Some examples of high-risk investments include individual stocks, hedge funds, and cryptocurrencies.

Inflation affects your savings because the value of the dollar loses purchasing power over time. While high-yield savings accounts are currently beating inflation, normally, interest earnings on savings accounts can't keep up with inflation.

Yes, tax-advantage accounts like a 401 (k) or ABLE account allow you to earn interest if you decide to put money in investment options.

• Bank accounts
• Savings and CD rate trends
• Budgeting
• Saving
• How banks operate

Reference

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