Chances are that your savings account is not earning much interest at the moment. In fact, a recent study shows that around 78% of Americans are earning less than 3% interest on their savings, which means that they are losing money to inflation as you remember inflation just few months ago hit all-time highs of 9%.
However, there are several ways to safely boost your bank account and earn a higher interest rate on your savings. Some banks and financial institutions are offering up to 5% interest just for depositing your money with them.
To help you become part of the 22% of Americans who are earning 3% or more on their savings, I have researched and found the top ways to earn more on your money. The best part is that most of these options allow you to easily sign up and deposit funds online, without the hassle of visiting a physical bank.
By taking advantage of these options, you can earn more on your savings, which can help you achieve your financial goals faster. Whether you’re saving up for a down payment on a home, building an emergency fund, or simply trying to grow your wealth, earning a higher interest rate on your savings can make a big difference.
Here are 5 tips on how to earn more on your savings.
1. Spend less than you earn
Well this is the obvious one, but it needs to be mentioned. If you are looking to increase your savings, the first step is to actually have savings in the first place. This means creating and sticking to a simple budget and finding ways to optimize your expenses so that you are spending less than you earn. By doing this, you will be able to quickly build up your savings account.
To get started, it is important to review your past spending to identify areas where you can cut back and save more money. This could include reducing unnecessary expenses like eating out or subscriptions you rarely use, or finding more affordable alternatives to things you regularly buy.
Once you have identified areas where you can cut back, it is important to take the money you save and put it into a high-yield savings account.
By following these steps, you can start building up your savings and earning more money on your money. This can help you achieve your financial goals and provide greater financial security for you and your family.
2. Use online savings accounts
If you’re looking for a way to maximize your earnings on your savings, it may be worthwhile to consider using an online bank. The reason for this is that many traditional banks offer very little in terms of interest on their savings accounts, making it difficult to grow your money.
On the other hand, online banks are known for their high-yield savings accounts that offer interest rates much higher than those offered by traditional banks. This is largely due to the fact that online banks don’t have the same overhead costs as brick-and-mortar banks, such as rent and maintenance for physical branches and salaries for employees.
By using an online bank, you can take advantage of their low overhead costs and earn a higher return on your savings. Additionally, signing up for an account with an online bank is typically a quick and easy process that can be done entirely online or through their mobile app. So, not only can you earn more interest on your savings, but you can also save time and avoid the hassle of visiting a physical bank branch.
3. Do not ignore sign-up bonuses
Have you heard about the sign-up bonuses offered by banks for opening new saving accounts? Along with the high interest rates, certain high-yield savings accounts provide cash bonuses to entice new customers to join their bank. This is an excellent way to earn additional money on your savings.
Banks offer such incentives as a strategy to encourage new customers to switch to their bank. However, it’s essential to keep in mind that there are some requirements to receive the bonus. Generally, a specific amount must be deposited into the account, and the funds should remain in the account for a certain duration of time.
4. Invest in short term US Treasury bills
If you are looking for a short-term investment with a decent rate, consider U.S. Treasury bills or “T-bills.” These investments are available in varying lengths, ranging from 4 to 52 weeks, and currently, some of the shorter-term T-bills offer the highest rates, with nearly 5% interest.
One advantage of investing in Treasury bills is that you can purchase them directly from the government through TreasuryDirect.gov. Moreover, the purchase price is usually discounted, so if you buy $1,000 of T-bills for a 26-week duration, you may only need to pay $950. At the maturity date, you would receive $1,000, thus earning you a 5% return.
It is worth noting that T-bills are considered to be a safe investment since they are backed by the full faith and credit of the U.S. government. Additionally, the interest earned on Treasury bills is exempt from state and local income taxes, making them a tax-efficient investment option. However, keep in mind that T-bills are subject to federal income tax.
5. Invest in dividend paying stocks
If you are open to investing some of your savings, investing in dividend-paying stocks can be a viable option to boost the yield on your money. By owning shares of dividend-paying companies or exchange-traded funds (ETFs), you may be able to earn regular income in the form of dividends, in addition to enjoying the potential for stock price appreciation.
Currently, there are many dividend stocks and ETFs paying over 5% in dividend yields, making them an attractive option for investors looking to generate income. However, it’s important to note that investing in dividend-paying stocks comes with some level of risk, as stock prices can fluctuate and the companies themselves may experience financial challenges or decreased profits, leading to a reduction or elimination of dividend payments.
That said, dividend-paying stocks are often seen as less risky than high-growth stocks, and they can offer a stable investment opportunity with the potential for solid returns over time. Before investing in any stocks or ETFs, be sure to do your research and consider the risks and rewards carefully.
