July 8, 2020

Ways to Earn More Than Low Yield Checking Accounts

Find Better Interest RatesMany people may be uninterested with earning interest and may be happy with their checking accounts the way they are. But for investors and other individuals the extremely low rates on these accounts might be very frustrating. These people will want their extra money to be working for them while it is just sitting around, and traditional checking accounts (and even high yield checking accounts) may not have much to offer them in terms of interest profit. Online checking accounts sometimes have better rates, but they are still not the most efficient option out there.

Here are some investment tips and options that can offer a better way to save and increase their funds. They each have their own pros and cons, but many investors will notice a boost in their returns when done properly.

Get Rid of Debt

Any kind of debt you are in has its own interest attached to it, and this interest will be slowly eating away at your funds until you get out of debt. The best thing you can do is take some of the extra cash you have sitting in your checking account and repay these debts. Start with the debts that have the highest rates of interest on them, such as a credit card with 17% interest, and work your way down. Another trick to getting rid of debt could be to use extra cash to refinance your mortgage. Reducing the balance on the loan or paying off the closing costs will bring down the interest and make the debt much more affordable.

Increase Your Savings

Trying to use your checking account as a place for spending and saving is a bad idea. With the money just sitting right there it may be difficult not to dip into your “savings” and use it and things you don’t really need. Putting your money into a savings account or a money market account takes away much of this temptation. And not only will these accounts keep you from spending, but they with their higher interest rates they will also be earning you more money.

CD Laddering

Certificates of deposit are an investment option where people put money into an account for a specified amount of time and the account earns interest at a fixed rate until the maturity date. To increase their returns on CDs, some people engage in an investment strategy known as CD Laddering. This works by breaking your money down into smaller amounts and investing it into CDs with different term lengths. The accounts maturing at different intervals means that you constantly have money to reinvest and you are constantly getting the some of best interest rates on the market.

Increasing Your Risk

Better InvestingIn the world of investing the higher the risk factor is, the greater the reward will be if the investment pays off. Buying stocks in lucrative businesses like gold companies and putting money in floating rate funds are examples of high risk/high reward investment options. These investments are great when they work, but obviously there are many people who will decide it is not worth the risk. There is much more safety in having a checking account that is insured by the Federal Deposit Insurance Corp. You should only attempt these risky investments if you are positive you have enough money set aside for life’s unexpected emergencies.