When you think about the best ways to get high interest returns, it means you have your sights set on the future and on saving rather than spending. This is a good thing. The stock market has traditionally been the best way to achieve the highest returns on your money. Ever since the economic crisis that began in 2008, however, many people are leery of investing because a faltering economy causes the stock market to tumble. If you are cautious and do not want to play the market, there are other ways to get high interest returns.
Be willing to switch banks. The interest rate some banks pay on traditional savings accounts is abysmally low. If you want a higher interest rate on your savings account, you need to shop around and transfer your money to a bank or credit union that offers the highest rate. Bankrate.com offers a service where you can shop for rates across the country (See Resources). Consider using an online institution because they often offer the best rates. Financial institutions change their rates, so you need to keep track of what yours pays each month. If it drops its interest rate on savings accounts, transfer your money again.
Consider a money market account. Sometimes MMAs offer better rates than savings accounts. They typically require a minimum balance and have certain restrictions on withdrawals.
Open a certificate of deposit through your bank or through a brokerage house. A CD often offers a higher interest rate than a savings account or an MMA because your money is tied up for a certain term, typically between three months and five years. Usually, the longer the term, the more interest you earn. Do not buy a CD with a term longer than five years because if interest rates rise during that time, you would be stuck with the lower rate. When the term is up, you can cash out or roll the CD over for another term.
Check into a money market mutual fund. Unlike savings accounts, MMAs and CDs, money market mutual funds are not federally insured. However, they are low-risk investment vehicles that must invest at least 95 percent of assets in U.S. Treasury notes.
- If you have high interest debt other than a mortgage, such as credit card debt, pay that off before trying to earn on savings. This is especially true when interest rates are low. If you are paying more in debt interest than you are earning in savings interest, the sense of security you might feel by saving money is false because you would be losing more than you would be earning.
Laura Agadoni has been writing professionally since 1983. Her feature stories on area businesses, human interest and health and fitness appear in her local newspaper. She has also written and edited for a grassroots outreach effort and has been published in "Clean Eating" magazine and in "Dimensions" magazine, a CUNA Mutual publication. Agadoni has a Bachelor of Arts in communications from California State University-Fullerton.