Photo Credit: Assisted Senior Living
I’ve been on a search lately to find a higher yield for my cash. These are my emergency funds, so they need to be accessible, liquid, and safe. It has been so depressing earning about 0.15% in my traditional bank savings account.
Here are so options that I have found that can yield more:
High-Yield Checking Accounts
The highest yielding FDIC-Insured products that I have seen are high-yield checking accounts. Many of these accounts are sporting rates above 2%, which is awesome given the low interest rates found elsewhere. However, I have been disappointed with all of the strings attached to the accounts, and it does seem like a lot of work to maintain the high yield.
For example, according to DepositAccounts.com, the current highest yielding account is at Atlantic Coast Bank, at it will pay you a sweet 3.01% APY. However, here are the strings attached to get this yield:
- Direct Deposit Required
- Required Online Statements
- 10 Monthly Debits
- Only Available Up To $15,000
If you happen to not meet any of those requirements, your APY will drop to a measly 0.05%.
However, let’s look at what you gain by meeting all of those requirements. If I kept $15,000 at my current bank, it would earn me a whopping $22.50 per year. If I had a high yield account at 3.01%, it would return me $451.50 per year. So, you would get an extra $429 per year. Is that worth the extra work?
Online Savings Accounts
Two to three years ago, online high-yield savings accounts were all the rage. They were able to offer some great rates that you couldn’t find at traditional banks.
Right now, while they don’t offer rates that compare to high-yield checking accounts, there are still some very high rates available online. The great thing about online savings accounts is that you can withdraw your money at any time, and you are not locked into doing silly tasks like you are with high-yield checking accounts.
One of my favorite accounts is offered through Costco and ING. This account offers you a high interest rate (currently 1.15%), and it offers you a bonus for signing up. You can open an ING DIRECT USA – High Yield Savings with the Orange Savings Account? here.
Certificates of Deposit
CDs have long been a favorite of individuals who have been seeking higher yield. However, you may be wondering how a CD meets my criteria of being accessible, as you need to tie your money up for a set period of time. Second, very short term CDs also offer very measly rates, almost equivalent to a savings account.
While you are correct you have to tie your money up, there are some CDs that offer penalty free withdraws after a short period of time, and there are others that offer very-low penalties, which still make them attractive.
For example, Ally Bank currently has a 5 Year CD that offers a 2.37% yield, but it has a low penalty. You can withdraw after one year, and still net almost 2% yield in the first year after paying your penalty. However, it is important to consider that you are still tying your money up for one year, and this may not be the best option for an emergency fund.
Readers, what are you thoughts on where to park your cash right now? Any tips on finding great yields?
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This post was written by...
Robert – who has written 317 posts on The College Investor.
Robert is the founder and editor of The College Investor, a personal finance site dedicated to young adult and college student finances. You can learn more about him here and connect with him on Twitter or Facebook.
{ 6 comments… read them below or add one }
Wow – that’s pretty cool. The Atlantic Bank terms don’t seem that hard and I’m loving the 3%. I have an ING account right now so I’m used to not having bank branches. I may just have to switch….
So basically where to invest my emergency cash?
Yes, you should look at these options to park your emergency cash. You don’t want to tie it up, but you don’t want to have tons sitting around earning nothing either!
We use ING and like it. It is great to have the money accessible in case we need it. We would do a bit better with a GIC but it is risky because it is locked in for a period of time.
CDs with a laddering strategy gives decent liquidity and returns. But again, as you point out, don’t put emergency savings into CDs.
Thanks for this post – this topic was on my to-do list because we are going to start an emergency fund in the near future. Atlantic Bank has a great rate! Thanks for the information.