Earn the Best Interest Rates on Your Money Even If Rates Change

Learn how to secure the best interest rates for your savings and investments, even if interest rate changes. Put money to savings accounts, CDs, and more.
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Written by Rob Sabo
Financial Expert
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Managing Editor
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Couple checking high interest rate on iPad

Earning money on your savings used to be rather tricky since meager interest rates made gains minimal to negligible. 

However, if you’ve been paying attention to interest rates on savings vehicles, you’ve likely noticed that they’ve ticked up as the Federal Reserve hiked interest rates to combat rising inflation. Chances are, you could be earning more on your savings today and in the foreseeable future.

Here’s what you can do now and down the line to ensure you continue reaping the benefits of high interest rates on savings products such as savings accounts, interest-bearing checking accounts, CDs, and Treasury Bills.

How Rising and Falling Rates Affect Your Savings

In 2023, inflation rose to a 20-year high. To curb runaway inflation, the Federal Reserve in March of 2022 initiated the first of 11 interest rate hikes that brought the prime benchmark rate from almost nothing (.25-.50) to around 5%.

While three interest rate cuts are predicted to happen in 2024, interest rates will still remain favorable for savers. When rates are high, it pays to save since you can earn more money on any cash you have parked in various savings products.

It pays to monitor the federal funds rate and where interest rates are on your savings vehicles. It may not make much sense to chase annual percentage yields (the interest you can earn over a year) when they tick up or down by a few tenths of a point, but if there are savings products that offer a difference of a whole percentage point or more, you may want to make some changes to where your money is parked.

Compare Bank CD Rates, Terms, and Fees

Hundreds of banks offer CDs, and there’s fierce competition among them to offer the best rates. We’ve compiled a list of some of the best CD accounts to help you find the ones that fit your financial goals.

Best Places for Your Money When Interest Rates Are High

Moving money around can be time consuming and challenging, especially with large balances. In the case of certificates of deposit, your money may be locked in for a certain period.

Keeping track of interest rates doesn’t have to be challenging. There are a variety of apps that can help you track the movement of interest rates on savings products, as well as many financial-oriented websites that post a variety of interest rates that are updated daily.

Interest rates are high and will remain so throughout 2024 and beyond. Here are our recommendations for some of the best places to park your cash to reap the rewards of current high interest rates.

Savings Accounts

Interest rates on standard saving accounts have historically been almost negligible. In 2010, national interest rates on savings accounts were between .17-.18%. By 2020, that rate had tumbled to .05%.

However, in the first quarter of 2024, the Federal Deposit Insurance Corporation reported that interest rates on standard savings accounts were .47%. Those rates still don’t amount to much, though. A $10,000 savings account balance would only net you $47 per year at that rate.

Instead, look for financial institutions that offer high-yield savings accounts. Interest rates at these banks and credit unions are hovering around 5% (some are slightly higher, and many are somewhat lower). At that rate, that same $10,000 deposit would net $500 annually.

Pros

  • Savings accounts are FDIC insured up to $250,000, offering a risk-free place to park your extra cash.
  • High-interest savings accounts offer substantially better interest rates than traditional savings accounts.
  • Most have low minimum opening deposits and no monthly maintenance fees.
  • It’s an easy way to make your money work harder.

Cons

  • The best interest rates on savings accounts are typically found at online/hybrid banks rather than large national banks where most savers currently bank.
  • Access to cash may be limited, and deposit thresholds must be maintained to earn the top-tier interest rate.

Money Market and Interest Checking Accounts

Money market and interest-bearing checking accounts work similarly to savings accounts but come with check-writing and debit card privileges.

Money Market Accounts

A money market account is a type of savings account offered by banks and credit unions that typically pays higher interest rates than regular savings accounts. It often requires a higher minimum balance and allows for limited check writing and debit card access.

The interest rates may vary based on the account balance, providing an incentive for maintaining higher deposits. Money market accounts are insured by the FDIC or NCUA, offering a safe place to earn interest on funds.

Interest Checking Accounts

Interest-bearing checking accounts work similarly to regular checking accounts, except customers can earn interest on their balances—most checking accounts don’t offer interest. Interest is calculated as a percentage of your total balance, so the more money you have in your account, the more interest you can earn—often to a certain amount.

Pros

  • Like standard savings accounts, MMAs are limited to six transactions per month. Some may come with unlimited transactions. There are no transaction limits with interest checking accounts.
  • Money market accounts may offer better interest rates than interest-bearing checking accounts and many types of savings accounts.
  • If you need quick access to your savings, interest checking accounts are an easy way to earn interest on money regularly accessed for bills, entertainment, and other types of routine spending.

Cons

  • Rates on both types of savings products aren’t competitive with other savings vehicles, such as the CD.
  • Many interest-bearing checking accounts have a cap on how much interest savers can earn each month.
  • Both types of accounts may have higher monthly fees and more stringent requirements for fee waivers than standard checking and savings accounts.

Certificates of Deposit

CDs are savings vehicles that deliver fixed returns based on a fixed interest rate. The length of time your money is tied up in a CD (called the “term”) can vary from a month to five years or more.

When the CD matures, savers can withdraw their cash and accrued interest or roll the funds into a new CD. Current CD rates are approximately 4% to 5.4%, though rates vary by financial institution and term length.

Pros

  • CDs have guaranteed returns with almost zero risk since they are insured up to $250,000 by the FDIC.
  • Interest rates tend to be higher on mid- and longer-term CDs than on short-term CDs.
  • You can lock in current high interest rates by purchasing multiple-term CDs (a strategy called CD laddering, see the table below).

Cons

  • CDs are highly illiquid. If you access your money before the CD reaches its maturity date, you’ll incur an early withdrawal penalty that may negate the benefits of its high interest rate.

CD Laddering

CD laddering is an investment strategy where savers purchase multiple CDs with varying terms. Blending long- and short-term CDs allows savers to have regular maturing positions, which can increase liquidity versus putting all your funds into one single CD with a predetermined maturity date.

Here’s one example of CD laddering using $5,000 (there are countless strategies based on varying term lengths and investment amounts):

  • You put $1,000 into a CD under one year
  • You put $1,000 into a 12-month CD
  • $1,000 goes into an 18-month CD
  • $1,000 goes into a two-year CD
  • $1,000 goes into a 36-month CD

When the first shorter-term CD matures, you roll over the funds into another short-term CD. Repeat when the 12-month CD matures, and so on. Rolling maturity dates help ensure that liquidity is never too far away like it would be if you’d simply invested all $5,000 into a 5-year CD. You can also reinvest matured CD funds into new CDs with potentially higher interest rates.

Treasury Bills

Treasury Bills, also known as T-Bills, are government debt sold in $1,000 increments for retail investors (everyday people). Proceeds are used to fund development of public projects such as highways, educational facilities, and infrastructure improvements. Maturity dates can range from one year to a few days.

Since T-bills are backed by the federal government, they are widely considered a “risk-free” investment. When they reach maturity, Treasury bills are sold at a discount to their total value. For example, a one-year T-bill valued at $1,000,000 may be sold for $950,000, meaning the investor pockets $50,000 after 12 months. That’s a yield of 5%.

Common maturity dates for T-Bills are 28, 91, 182, and 364 days. 

Pros

  • T-Bills with longer maturity dates typically offer greater yields than shorter-term Treasury Bills.
  • T-Bills are an extremely safe place to park extra cash for shorter periods.

Cons

  • Returns on T-Bills are generally lower than other savings instruments.

Frequently Asked Questions (FAQs)

What factors should I consider when choosing a savings instrument, such as a savings account, treasury bill, or CD?

Competitive interest rates are a primary consideration, but so is liquidity. Some savings vehicles tie up your money, reducing your overall liquidity (your ready access to cash). Others offer high interest rates, allowing you to tap into your money if needed. When comparing savings products, make sure you aren’t unnecessarily tying up money you might need to access in the near term.

What are some signs of a good high-interest savings account?

Many financial institutions offer high-interest savings accounts. APY is important, but savers should also look for accounts that don’t have fees, account balance minimums, or caps on the amount of interest you can earn. Access is also essential. Linking a high-yield savings account to your existing accounts could help move money into the account as necessary, increasing your overall yield.

About Author
Rob Sabo
Rob Sabo has been a Nevada-based business reporter for nearly two decades and full time freelance writer since 2017. He writes on a wide range of financial topics, including investing, taxation, personal finance and retirement planning.
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