Forget the traditional bank savings account and park your money in a high yielding account where you’ll earn much greater returns. I found the 3 best places for your short-term cash savings in these current market conditions. By placing your cash savings in one of these accounts, you’ll maximize your returns, retain accessibility to your money, and take one step closer to reaching your short term monetary goals.
1. Online Savings Accounts - Place your funds in an online savings account and earn at least 5% APY as long as the Fed doesn’t lower interest rates. These high interest rates won’t last forever so you must act now by opening an account and earning interest right now. Emigrant Direct and HSBC are two reliable banks that offer online savings. If you prefer online checking and still want to earn 5%, try Washington Mutual Online Checking.
2. Bank CD’s - CD’s are worthy investments provided you don’t need to access the money for the given CD length. Your personal bank will offer CDs with various term lengths and denominations. Longer terms and larger deposits yield the highest APYs. Bank of America yields 1% on 1-month Cds and 5% on 12-months CDs of $1,000. The monetary benefits of CDs are highly positive, but I defer investments that tie up your short-term savings for long periods. I’d go with either an online savings or money market account instead.
3. Brokerage Money Market Account - Your brokerage account is not only a great place for long-term investments such as stocks, but also for short-term funds because broker money market accounts earn high yields. ShareBuilder’s money market cash account earns 4.44% APY, which helps increase your total yearly investment returns. Just park your cash in the money market account until you’ve decided to what to do next. Until you decide, take advantage of the nearly 4.5% interest and build your wealth.
No matter where you stash your short-term savings, make sure you’re earning more than the annual rate of inflation. US inflation is around 2.7% each year, and if your current savings is earning less than that number, your cash is losing value at this moment. Inflation is almost 5 times what Bank of America pays in interest for regular savings accounts. Do not let your hard earned savings go to waste. Think savvy and stash your cash in one of the high yielding accounts mentioned above to earn the greatest returns on short-term savings.
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