How to Earn More Interest on Your Money

  • Bank account interest rates have risen slowly since the Fed began raising interest rates.
  • Some banks are raising savings rates faster than others, so you may earn more by changing.
  • It is also worth considering buying a savings bonus or building a CD ladder.

Savings interest rates have been rising slowly in recent months and the Federal Reserve has continued to raise interest rates to cope with inflation.

If you’re ready to take charge of your savings and find ways to earn more interest on your money, here are five options to explore.

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

Although interest rates on savings have risen tentatively in recent months at various financial institutions, this does not necessarily mean that your savings account will experience a sudden increase in your rate.

If your bank has not yet made an announcement, Maggie Gomez, a CFP® professional and owner of Money with Maggie, suggests that you ask your bank for an increase in the current rate you receive.

Gomez explains that some financial institutions will not immediately deliver a higher rate unless consumers are proactive.

“Later, to be more competitive, they will increase their rates more publicly, but I think it’s going to be very slow,” Gomez adds.

2. Search online financial institutions for a high-yield savings account

According to the FDIC, the national average interest rate on savings accounts is 0.06% as of May 2022. However, several financial institutions pay much more than the national rate.

Jerel Butler, a CFP® professional and founder of Millennial Financial Solutions, suggests looking into competitive financial institutions for competitive interest rates on savings accounts.

“It’s a little tricky with inflation,” Butler points out. “The best savings option for a typical savings account is an online savings account.”

How to calculate interest on a savings account

If you want to see how much interest you will earn over time on a specific account, you can use ours

compound interest

calculator to help you. Clicking on “More Details” will provide a breakdown of your initial investment, total contribution, and total interest earned.

Your balance after 5 years

Initial investment


Total contribution


Most banks earn compound interest on a daily basis. In the meantime,

credit unions

usually earns compound interest monthly. If you’re not sure how often your account is dialed, please contact your bank’s customer service.

3. Consider switching banks if the fee is worth it

Butler says you should also spend time exploring other financial institutions and comparing different savings accounts.

“This is a great opportunity to take advantage of the rising interest rate market, and maybe you can take advantage of a welcome bonus at another bank,” adds Butler. “Many banks, as a result of higher interest rates, are also conducting special promotions.”

If you find a specific account that offers more attractive offers than your current bank, you may want to consider switching institutions.

4. Buy savings bonds

Savings bonds are federal debt securities. Lindsey Bell, Ally’s chief market officer and monetary strategist, says federal issuance bonds are a safe investment option, though there are a couple of things to keep in mind.

“There’s a limit to what you can invest in those. They’re probably a little more volatile than a CD or a savings account, so you have to keep that in mind,” Bell explains.

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

Butler says building a CD ladder can be ideal if you find a competitive rate, and are generally reluctant to take risks. However, if you’re not reluctant to take the risk, Butler adds that there are more options you should consider first.

CD ladders offer a way to take advantage of higher CD interest rates. Instead of depositing all your money on a single CD and blocking your deposits for a set amount of time, you’ll split your savings into a mix of durations.

Bell suggests joining CDs in one- or two-year periods. If interest rates rise during the year, a CD ladder provides enough flexibility to buy a new CD once your accounts mature in the short term.

Source link

Leave a Comment

Your email address will not be published.