Earning high-interest returns on your money is certainly possible when using investment vehicles like the stock market and even cryptocurrencies.  Sadly though, the perceived complexity of investing leaves to-be-investors frequently requiring the guidance of financial advisors.  While large investments are perhaps those best handled by financial advisors, general operating cash, that sits in savings and checking accounts, should always be earning interest too.

It’s essential to capitalize on and maximize any potential returns on funds kept in savings and checking accounts.  The great news is that with little knowledge earning more interest is possible and seemingly uncomplicated.

Here are six ways to earn more interest on your money.

Consider an online bank

The need to visit a bank teller to pay bills and transfer funds is becoming less common with online banking as the new normal.  Even paper checks can be deposited online by simply taking a picture of the front and back.  The more banking activities made possible through online banking leads to increasing levels of clout for highly competitive virtual banks.

Virtual banks, of course, are those that have no physical presence.  In essence, they exist completely online, leaving customer service dealt with strictly over the phone or through online inquiry like instant chat or email.

When first considering a virtual bank, your initial concern might be the security of your money.  After all, there’s something reassuring about meeting a teller face-to-face that just makes traditional banking seem that much more legit.  However, virtual banks, when compared to brick and mortar banks have comparable levels of security, like firewall protection and encryption, and standard federal deposit insurance too.

In the event of a bank failure, those with membership in the Federal Deposit Insurance Corp (or FDIC), have accounts that are insured.  As an example, banks like Ally and Aspiration are members of the FDIC meaning that accounts like checking, savings, and certificates of deposit are individually insured resulting in insurance of up to $250,000 for each deposit account category.  For obvious reasons, more complex investments, like mutual funds and stock investments are not covered in FDIC insurance coverage.  

So, aside from the personal face-to-face customer service of traditional banks, what else have you got to lose by considering a virtual bank instead?

Turns out, you’ve got a pile more to gain.  As virtual banks don’t have brick and mortar locations, the savings in their operating costs are often passed to their consumers. Considered the limited need for real estate, and the costs associated with running an office building, not to mention the astronomical cost of personnel. 

Virtual banks, as a result, can offer their customers low-fee or no-fee products and higher-than-standard interest on many accounts.

To get started earning more interest on your money – consider opening an account at an online bank to reduce or eliminate your banking fees and capitalize on higher returns.    

Make the switch to a credit union

For those too fearful to jump onto the virtual bank bandwagon – the next best bet might be a credit union.

Credit Unions, said to offer a more personal touch, potentially due to their smaller size, are non-profit entities run by their members.  And, it’s just this non-profit approach that, similar to virtual banks, leave the savings passed on to its members.  

Often offering lower interest rates on loans and higher interest rates on savings accounts, a credit union, on its own, is a great way to earn more interest on your money.

Open a high return checking account

It’s common to come across numerous checking accounts providing zero to very little interest.  Many checking accounts which pay interest often have a required monthly banking fee or complex requirements for qualification.  Frequently needing a high balance or multiple products to qualify, simplified interest-bearing checking accounts are difficult to find.  

And, even after meeting any given requirements, the interest can be minuscule – in some cases, as little at 0.01%.  

To put that in perspective, in one year, $5,000 would only earn $0.50.

It is possible though, to find a no-fee interest checking account, (in some cases as high as 3.01%) paying significantly higher interest, but be prepared to read the fine print first.

In many cases, high return checking accounts will have a minimum number of banking transactions required, and a maximum account balance.  An example might be 10 or more debit transactions required per month, a maximum account balance of $15,000 (to receive the high interest rate, after which point it reverts to a lower rate), and the agreement to have at least one direct deposit.  And, like many great deals, the high-interest offer may be for a limited time only.  Also, fail to meet the terms at any time, and the high-interest rate promotion will cease to exist.

Here are a few high return checking accounts to consider:

Bank Name

Interest Rate (APY)

Min Monthly Debit Card Transactions

Auto Deposit Requirement

Max Balance for High Interest

Cross Keys Bank

2.05%

12

1

$10,000

Ouachita Independent Bank

3.01%

12

1

$15,000

Main Street Bank

2.00%

12

n/a

$15,000


Checking accounts should earn money, mainly because, contrary to savings accounts, there’s always money rotating through.  It all depends on the hoops you’re willing to jump through to make your checking account funds work for you.

Leverage a high-interest savings options

Money left uncommitted, not locked into a savings account, will command a higher return than a comparable checking account.  Similar to high yield checking accounts, there may be requirements to meet to find the higher paying accounts.

In the case of higher or more standard savings account interest rates, it’s important to shift idle money – that sitting in a checking account – into your savings account to capitalize on the higher interest rate.

Here’s an example.

You’re paid every two weeks, and today your paycheck is auto-deposited into your checking account.   After reviewing your bills it’s clear that you’re unlikely to need this money until the following week.  It can be beneficial to shift money unneeded into your savings account until it’s needed, at which point, you’d move it back to your checking account.

Two conditions should exist before moving money from your checking to your savings:

  • The first is when you have a large balance in your checking account – some of the funds being unneeded in the short term;
  • And, the second, is when the interest paid on the savings account is higher than that of the checking account.

Moving money from a checking account into a simple savings account leaves the funds earning a higher interest rate, while still be relatively easy to access when the time comes.  It is wasteful to leave excess money sitting in an checking account if the savings account will provide a higher return.

Often the highest forms of interest are paid through more complex investments, requiring risk, minimum funds, and are not overly quick to access.

When even a savings account has excess funds available, a further investment consideration might be a Certificate of Deposit (or CD).  A CD, in some cases, will pay even higher interest than a general savings account with its drawback being a set time commitment – leaving the funds inaccessible.  The commitment length for a CD can range from three months to 5 years.

To earn more interest, move idle cash from checking into savings, and when a savings account contains idle cash, investigate a CD as an alternative.

Leave earned interest untouched

Interest paid out on investments can be tempting to spend – often deposited back into operating accounts – like checking accounts.  It is better though, if interest earned is deposited into the highest returning interest account, and into one that is more challenging to access.  

The decision to have interest earned paid into the highest earning interest account is obvious, but making it less accessible might seem less so.  To reap the rewards of compound interest, where earned interest earns interest on itself, the money earned, must remain untouched.  

The fastest way to capitalize on compound interest is by ensuring that interest paid is available to be compounded.

Capitalize on bank incentives

Many banks offer initial sign-up incentives which might include one-time cash bonuses or limited higher-than-usual interest rates.  While it could be beneficial to chase incentives, opening numerous bank accounts at a variety of institutions, and the related work and hassle likely aren’t worth the return.

Here are few banks offering sign-up incentives now:

Bank

Account Name

Incentive

Details

TD Bank

TD Premier Checking

$300

Must receive $2,500 or more in direct deposits within 60 days of opening your account.

Chase

Chase Total Checking & Chase Savings

$200 + $150

Must open Chase Checking and Chase Savings to receive $350 and complete qualifying activities.

CitiBank

Citibank Checking

$300

Must deposit $15,000 into Citibank Account where it must remain for at least 60 days.  In addition, must have one direct deposit.

Best though is to research the incentives available and find those that offer bonus offerings as an ongoing business practice – not just for an initial sign-up.

For example, a bank might offer a 1.25% general savings account interest but might offer a limited period paying 2.00% on all new deposits.  Bonus interest offerings can make a significant impact on the interest earned over time.  

The bottom line

Checking and savings accounts usually hold funds that are intended for near-term use. For this reason, they are often uninvested in a formal sense.  However, a lack of formal investments doesn’t mean that these monies don’t warrant earning interest too.  With some quick research, it’s always possible to earn interest, and with the careful selection – possible for high-than-usual interest rates too.