You typically receive interest on the account balance when you have money in a savings account. Even in the current context of rising rates, the interest you earn can, regrettably, produce little money.

Since many savings accounts are currently returning significantly less than the rate of inflation, your savings are losing purchasing value over time. However, there are strategies to increase your return on investment regardless of the state of the economy. Therefore, consider these tactics if you have money saved up and wish to earn a greater interest rate without taking on too much risk.

1. Open a high-yield savings account.

A few banks provide unique, high-interest savings accounts with higher rates than regular accounts.

Online banks are one of the finest sites to hunt for high-interest savings accounts. Online banks rarely impose monthly fees since they save money by not maintaining branches. Additionally, they frequently provide interest rates that are significantly higher than those provided by conventional banks.

Currently, certain high-yield savings accounts have an annual percentage yield (APY) of about 3.75 percent, which is over 20 times higher than the 0.19 percent national average for savings accounts. If you deposited $5,000 into an account, based on these two rates, here is how much interest it would have made after a year:

• Interest on a 3.75 percent-earning account APY: $191
• Interest on a 0.19 percent APY account: $10

By choosing the high-yield savings account, you would make about $181 more. You may use the savings account interest calculator on Bankrate to calculate how much your savings can earn by entering cash amounts, return rates, and time frames.

2. Take into consideration rewards checking accounts.

Some banks provide incentive checking accounts, which could result in cashback on debit card purchases. The most advantageous users of this kind of checking account would be those who frequently use debit cards for transactions.

Other rewards checking accounts provide higher interest rates, albeit they frequently have a lower minimum balance requirement. To qualify for the bonus rate, you might also need to pass through a few hoops.

On balances up to $10,000, Consumers Credit Union (CCU), for instance, offers interest rates as high as 5%. However, to qualify for that rate, you must fulfill all the conditions listed below:

• Enroll in electronic statement delivery.
• Make 12 debit card purchases or more per month.
• Get at least $500 monthly in direct deposits, mobile check deposits, or ACH credits.
• Use the CCU credit card for monthly purchases of at least $1,000.

If you decide to use rewards checking account, make sure you can easily fulfill the requirements to qualify for the higher interest rate. If not, you risk receiving less interest than you would from a typical savings account.

benefit from bank bonuses

Many banks provide sign-up incentives to new clients who open an account and fulfill a few requirements. To qualify for checking account bonuses, you must establish consistent direct deposits and complete a minimum number of transactions each month.

Bank account bonuses are a simple method to boost your income if you already have some money saved up. These bonuses often require brand-new clients to make a minimum deposit and keep it in their account for a predetermined amount of time. In other words, you might increase the amount of your savings by creating a new account and financing it with funds from another bank.

For instance, if you deposit $10,000 and keep that amount in your account for at least three months, you might receive a bonus offering of $300. If the annual percentage yield (APY) didn’t change and you didn’t add to or take from the account during the year, receiving such a bonus would be comparable to receiving a 3 percent APY in a savings account.

Read the fine print carefully. If you don’t meet specific standards or attempt to terminate the account too soon after opening it, certain banks will charge a fee. If you shut the account quickly after receiving the incentive from some banks, you might even be forced to forfeit the prize.

4. Investigate money market accounts.

Money market accounts offer a mixture of the features found in savings and checking accounts. They pay interest, sometimes at higher rates than high-yield savings accounts, while commonly offering check-writing rights and debit cards that you may use to make withdrawals, with some restrictions.

Money market accounts may have higher fees and lower minimum balance requirements than savings accounts, which is a negative. Additionally, there is no assurance that the money market account at your bank offers a higher rate than the savings account does.

5. Verify with your neighborhood credit union

In contrast to banks, credit unions are owned by individuals, or members, who have accounts there. This indicates that they serve account holders rather than stockholders as their primary constituency.

That may occasionally result in lower fees, better account benefits, and higher interest rates. Check the rates offered by any credit unions in your area; you might be able to find a decent bargain there.

Consider a credit union that enables you to apply and completes all of your banking operations online if you don’t have access to a credit union nearby and don’t often conduct any of your banking in person.

While some credit unions are reasonably simple to join by anyone, others are only accessible to those who reside in a specific area or work in a specific sector.

6. Take into account certificates of deposit

Compared to conventional savings accounts, certificates of deposit (CDs) often offer greater interest rates. The ability to withdraw money from a CD is less flexible.

When you finance a CD, you have to consent to keep the money there for the term, which is the predetermined amount of time. You must keep the money in the account for the entire year if you open a one-year CD, for instance. An early withdrawal fee applies if you withdraw your deposit before the term has ended.

One advantage is that you may lock in the interest rate when you open a CD. You’ll continue to make the same amount of money even if market rates fall. However, if rates increase, you will be forced to continue receiving the lesser rate until the CD matures.

You have two options for your money after the CD’s term expires withdrawal or rollover into a new CD. If you roll the balance into another CD, you must wait until that CD matures before you may withdraw the money again without incurring penalties.

7. Construct a CD ladder

CD ladders offer some of the flexibility of savings accounts with the greater interest rates of CDs.

Opening numerous CDs with different maturity dates is known as laddering. You may, for instance, start opening one-year CDs every month for the first year, and then one will mature every month during the second year. You may create the ideal CD ladder with the aid of Bankrate’s CD ladder calculator.

In this scenario, as opposed to locking up all of your funds in a single one-year CD, you can remove a portion of it regularly each month without incurring an early withdrawal fee.

Depending on how much freedom you’re ready to give up for greater interest rates and how frequently you want access to your money, you should organize your CD ladder accordingly. A five-year CD ladder, for instance, would entail the purchase of five CDs with various terms, including one-year, two-year, three-year, four-year, and five-year CDs. You would reinvest the proceeds from each maturing CD into a new, higher-yielding five-year CD, but one of your five CDs would still mature each year.

Consider purchasing bonds.

You can invest your money in bonds rather than conventional savings account if you don’t mind a little risk or withdrawal restrictions.

Purchasing a bond is equivalent to lending money to the organization or government that issued it. You receive your money back along with any interest you have accrued when the bond matures. You can purchase Treasury or U.S. Savings bonds, as well as bonds from well-known corporations. Riskier bonds often offer higher interest rates and longer repayment durations than safer bonds. Bonds with longer periods and corporate bonds with a higher default risk typically have higher rates.

Bonds might lose value if market rates rise, which is something to bear in mind. (A bond’s price moves anticlockwise to its interest rate.) As a result, you might have to sell your bond for less money if you decide to sell it to someone else before it matures. Even yet, bonds carry significantly lower risk than stocks, making them an excellent option to boost your savings’ yield while taking on a little bit more risk.

Many bond investors are looking to Series I bonds as the inflation rate is close to 40-year highs. These bonds’ interest rates climb along with inflation, ensuring that your money won’t gradually lose its purchasing power. However, when inflation declines, so does the interest rate on these bonds.

Which choice would result in more interest for you?

These choices all can raise the interest rates on your savings. Nevertheless, the interest-bearing choice that is best for you will depend on your requirements, risk tolerance, and level of effort.

For instance, bank bonuses can be quite lucrative but demand a lot of work and close attention to detail. Although CDs may provide greater rates, you must lock up your money and face early withdrawal penalties. Additionally, higher-yielding bonds put you at risk of losing money if you decide to sell them before they mature and the market volatility causes their value to decline below what you paid for them.

Spend some time considering which of these tactics is best for you.

To sum up

One of the numerous advantages of having a savings account is generating interest; earning more will only help you maintain or enhance the purchasing power of your nest egg. These low-risk tactics can increase your interest profits while protecting you from more volatile stock investments that could be outside the bounds of your risk tolerance.