5 Ways to Earn Higher Interest

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Points of Interest

With traditional banks offering such low interest rates, it’s time to look elsewhere. By shopping around, you can find much better interest rates to make your money go further.

When looking for the best way to earn interest, it can be frustrating jumping from bank to bank, looking for that coveted 5% interest savings account.

Bank interest rates are usually unimpressive. The average interest rate is just 0.1%. The good news is there are ways to earn more from your savings. However, you may need to look beyond traditional methods instead of going with the bank you have always used. Instead of typical brick-and-mortar banks, it’s time to look at online banking and credit unions. 

5 ways to earn higher interest with low risk

1. Switch to an online bank

The easiest and most risk-free way to increase your interest rate is to make the switch to an online bank. Online banks offer a range of products including savings accounts and investment options. 

While some people are wary of online banking, as long as the bank is FDIC-insured, your money will be safe. 

The great thing about online banks is that they often offer higher interest rates. As online banks don’t need multiple branches, they have lower overheads. This means they can pass those savings on to you. 

The main downside is that there is no face-to-face help on offer, but if this isn’t an issue for you, switching to an online bank could be well worth it. 

2. Invest in higher interest, lower risk products

The next step in making your savings go further is to find products that offer higher rates with lower risks. This means looking into high-interest savings accounts. 

A high-interest CD account (certificate of deposit) is a product offered by banks and credit unions to provide high interest rates. In exchange for the higher interest rate, customers must agree to deposit a lump sum of money without touching it for a set period of time. There are many different options for CD accounts, so it’s important to shop around for the best rates. 

The main downside to depositing money into a CD is that you can’t readily access the money until the set term is over. This isn’t always convenient or possible for some people.

3. Try out automatic investing apps

While many people can be wary of the risk that comes with investing, it’s a good way to make your money grow. Interest rates can typically only get you so far, whereas investing has the potential to grow your money further. 

Mobile apps such as Acorns allow people to passively invest small amounts in stocks and bonds. Acorns allow you to invest your spare change through automatic round-ups, into funds of your choice. You don’t need lots of experience or knowledge to get started.

The downside to investing is that there’s always a risk. However, investment is a long-term game and most dips in return are only temporary. However, as investing is a long-term method, it means your money is not readily accessible. Therefore, it’s not the best place to hold the cash you need to access quickly. 

4. Join a credit union

Another method of earning higher interest is to join a credit union. A credit union is a not-for-profit organization that is controlled by its members. 

Unlike a traditional bank, credit union members actually become part-owners of the union. This means that credit unions can return profits to their members by offering higher interest rates and lower account fees than banks. 

If your search for high-interest bank accounts has been disappointing so far, joining a credit union could be a smart alternative. Joining a credit union is a fairly simple process. To get started, you may need to make a small donation. However, you will benefit from higher interest rates, which typically make it a worthwhile option.

5. Focus on bank bonuses and other perks

For another way to grow your money, it’s worth shopping around for bank accounts that offer bonuses and other perks. These perks could include high interest rates, loyalty schemes or preferable rates for loans or mortgages. For example, some banks such as Ally will offer loyalty reward rates if you invest in their CD product. 

Some bank accounts will offer cash bonuses if you open a new account with them. For example, HSBC Bank can offer up to $450 depending on the type of account you open.

One thing to be aware of here is that you may be required to meet a minimum initial deposit or even a minimum monthly deposit.

Tips for how to choose the right move for you

These are just some of the ways you can earn higher interest rates to make your money grow. It’s worth doing some research on the best interest rates, but be sure to look beyond traditional banks. Online banks and credit unions are great options to explore. 

While choosing the best method for you, it’s important to ask yourself what you want to do with your money. For the simplest method, a high-interest checking account or a credit union could be your best bet. This is preferable for those who can’t afford to risk money in investments or to lock money away without being able to touch it.

If your approach to risk is a bit more flexible, then investing is a great way to grow your money further. It’s easy to start small, with a low-risk method such as investing spare change each week. You can always go one step further and increase your investments. For those who don’t need to access their money right away, CDs could also be a good option to try out. 

The final word

There’s no need to settle for low interest rates. Instead, you can look into alternative options to find the best rates possible. You could even use a combination of the methods above. 

With several ways to make your money grow, the best way to earn interest isn’t always clear-cut. The best option for you will depend on your individual circumstances and needs, but the good news is there are a few great options for you to explore. 

Kara Copple

Contributing Finance Writer

Kara is a freelance writer, specializing in personal and business finance content. She loves taking complex topics and making them easier to understand to help people improve their knowledge on all things finance-related.