If you have extra cash sitting in a checking or savings account – or even in a dresser drawer – it is easy to get complacent and not pay attention to what you are earning. You might figure rates are so low that you won’t really make anything anyway. But, as I write this in January of 2023 interest rates are creeping up to semi-respectable levels on a variety of cash accounts, money market accounts and treasuries.
Having said that we’re still getting battered by high inflation so long-term these vehicles are subject to devaluation in relative terms due to inflation – which is sky high at the moment. However, if you are just looking for safety and a way to earn more money simply by transferring your money to a higher interest rate environment then this is a quick no-risk way to make more money right now without actually doing anything. So, who doesn’t want a little extra money with little or no risk?
How Much Extra Can You Make??
So, just check the interest rate you’re currently earning and compare it to what you could be earning below. For an example say you have $10,000 sitting in a Chase account earning .01%. Over a year you would earn a whopping $1. Woot woot! However say you decide to transfer that money to CIT bank that pays a little over 4% interest. After a year you would have $400. $400 in one year simply for taking a few minutes to set up an account at a different FDIC insured bank and moving your funds. Seems like a no-brainer.
Now, as a disclaimer don’t take this as financial advice and always do you own due diligence. The rates on the following investments are accurate at the time of this post but can change at any time. Also, whatever you do don’t chase higher interest rates on a centralized crypto platform like I tried to do. You can click the link to read that horror story if you wish.
High Interest Savings Rates at Banks
Some of the best rates are at internet banks that don’t have a brick and mortar building and consequently much lower overhead. The following savings accounts are all FDIC insured up to $250,000. Most if not all have no or extremely low (like $1) minimum balances and no fees.
One thing you want to do is to check out the reviews of any and all accounts that you wish to invest in. In fact, before posting this article I was checking reviews on one of the banks that had an interest rate of 4%. The reviews for that particular bank were very bad. Granted most of those bad reviews were in regards to the lending side of their bank but they also said that customer service was the worst. Anyway, although their rate is great I removed them from this list. Out of the ones left I’ve personally used three of them and had no problems.
Marcus by Goldman Sachs
Marcus by Goldman Sachs Rate: 3.30% apy
Capital One
Capital One Rate: 3.3% apy
Barclay’s
Barclay’s Rate: 3.4% apy
Citi Accelerate Savings
Citi Accelerate Savings Rate: 3.4% apy
CIT Bank
CIT Bank Savings Connect Rate: 4.05% apy
Upgrade Premier Savings
Upgrade Premier Savings Rate: 4.13% apy
Sofi Savings
Sofi Savings Rate: 3.75% apy
Discover Bank
Discover Bank Rate: 3.3% apy
So, there you go as far as high-rate interest savings accounts go. A wide variety to choose from. If you have money sitting around making next to nothing why not see if you can earn a little more for next to nothing work wise?
Inflation Pushing Up the Rate on I-bonds
Now, the U.S. treasury sells I-bonds. As inflation has been rising these formerly in the dumps investments have started to gain favor. The nice thing with them is that they have a built-in inflation hedge.
What is an I-Bond? An I-Bond is an investment that pays interest monthly. It includes a fixed component and an inflation-adjusted component. Recently because inflation has gone up so has that inflation component. And most recently the fixed component, which had been at 0 for some time has gone up as well to .4 % most recently. The composite rate for I bonds issued from November 2022 through April 2023 is currently 6.89%. To see how they figure that rate check out the Treasury Direct Interest Rates page at that link.
As you can see the current I-bonds rate is better than all the high-yield savings accounts listed above. However, there are some caveats that you should be aware of before investing in them. They are briefly touched upon below but covered in more detail on the Treasury Direct website.
You can buy I-bonds at the Treasury Direct website. There are a few things you should be aware of with respect to purchasing I-bonds. First, you can’t cash out your bond for the first 12 months. And, should you decide to cash out before five years you would lose the last 3 months interest. It is all explained on the I-bond page at the Treasury Direct website here: I-Bonds at Treasury Direct
Other High-Yield Investments
There are a number of other high-yielding investments out there like preferred stocks, bonds and high-yielding closed end funds but for right now these are the safest plays.
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may the winds of fortune be with you,
Bob K.
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