Growing Your Money in Bank Savings Accounts

1. Take advance of bank bonuses

Many banks offer introductory bonuses for new customers that sign up for an account and meet a few requirements. Usually, checking account bonuses require that you set up regular direct deposits and make a minimum number of transactions each statement period.

For people with some savings already set aside, savings account bonuses can be an easy way to increase your earnings. These bonuses typically ask new customers to transfer a minimum amount to the account and keep it there for a certain time period. In short, you could boost your savings balance by opening a new account and funding it with savings held at another bank.

For example, you might see a bonus offering $400 if you transfer $10,000 and maintain that balance in the account for at least three months. You can easily calculate the effective interest rate for the offer.

If you earn $400 on a balance of $10,000 in three months, you would earn the equivalent of a 16 percent annual return in that initial three-month bonus period.

You’ll also receive the account’s typical annual interest payments while you have your savings in the account, boosting your earnings further.

Be sure to read all the fine print. Some banks will charge a fee if you don’t meet certain requirements or try to close the account too quickly after opening it. Some banks might even make you forfeit the reward if you close the account soon after getting the bonus.

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4. Checking account

A checking account at an insured bank or credit union is a very safe place to put your money; however, it’s not necessarily the best place to save your money.

Instead, checking accounts should be primarily used for storing the money you spend on everyday, necessary expenses. Checking accounts are highly liquid and come with check-writing privileges, ATM access and debit cards. Withdrawals can be made at any time and there’s no risk to your principal.

Although it’s not common, there are checking accounts that offer decent yields. But these accounts should not be your main place for storing savings.

Fees typically are nominal or waived if you maintain a minimum balance, set up direct deposit or use your debit card a certain number of times each month.

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8. Try a money market account

Money market accounts offer a mixture of the features found in savings and checking accounts. They pay interest, sometimes at higher rates than high-yield savings accounts, while offering check-writing privileges and debit cards that you can use to make withdrawals, with some restrictions.

The drawback of money market accounts is that they often have higher fees and minimum balance requirements than savings accounts. There is also no guarantee that your bank’s money market account pays a better rate than its savings account.

5. Pay off your debt

With debt hanging over your head (and possibly increasing monthly), it can be hard to imagine how you could possibly grow your money. But it absolutely can be done. The first step is to come up with a plan to pay off your debt.

Loans are important financial tools that help us accomplish all kinds of things, like getting an education or paying for a house. However, high-interest-rate loans can lead to all sorts of unnecessary costs.

In fact, it’s estimated that the average American will spend over $160,000 in interest payments alone over the course of their lifetime.

By paying off your debt, you’ll reduce the amount of money you spend on interest payments and have more money to use toward making your money grow, like investing in the market or investing in yourself.

The best thing about coming up with a plan to pay off your debt? With the right strategy in place, you can pay off debt and save and invest, all at the same time. Paying off debt doesn’t have to come at the expense of growing your money.

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Creating a savings habit

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Get prepared if you’re planning to invest

If it’s not time to invest yet, you may want to evaluate your financial priorities. One way is by using our My Money Map online tool — where you can track your spending, start a budget, and track savings in easy-to-understand charts.

Use My Money Map

3. Change your mindset

Speaking of mindset, once you know your goals, it’s time to level up your money mindset. First, determine what is blocking you from fulfilling your money goals. Fear is one of the major blocks you might have when it comes to figuring out how to grow your money.

Fear is a totally understandable feeling when you are new to something, like so many are to personal finance. One of the best ways to combat fear is through education. Clever Girl Finance’s completely free “Build a solid foundation” bundle is a great place to start.

After you’ve educated yourself on the topic you fear, you’ll still have to push through to get started. Once you take that first step, though, you’ll see that none of these financial topics are that scary after all.

Another mindset shift you might have to make? Expecting growth to happen overnight. We hear all of the get-rich-quick stories, but that’s unlikely to happen. If you expect to learn how to make your money grow fast, you aren’t looking for the right thing.

Patience is the key to growth. Understand that growing your wealth will take time. Little by little, you’ll see progress and, eventually, your money will grow.

2. High-Yield Checking Account

A high-yield checking account could be an attractive place for your savings, especially if you want near-instant and unlimited access to your funds while earning interest. Unlike a savings account, checking accounts generally come with a debit card or check-writing capabilities. And checking accounts have no restrictions on the number of transactions you can make within a statement cycle.

These can be good accounts if you’re saving for short-term goals, like a vacation or a new appliance. They allow you to earn interest on your balance and quickly spend whenever you need to, allowing you, for example, to swipe your debit card and take advantage of a sale when it comes along.

What Is a High-Yield Checking Account?

High-yield checking accounts operate like regular checking accounts but with interest earnings. To earn the interest rate, you’ll often have to meet monthly requirements, like making direct deposits of a certain amount.

The best high-yield checking accounts offer rates far higher than the national average of interest-bearing checking accounts, which is 0.03%, according to data from the FDIC. While some accounts require a minimum deposit to open, others don’t.

How Do You Open a High-Yield Checking Account?

Once you find a bank or credit union offering the rate and opening deposit requirements that fit your needs, you can complete a simple account application, provide identification and make an opening deposit (if required).

Eliminate Debt

It’s true that you need to have a cushion of savings to stand between you and financial catastrophe. Once you achieve that, however, you should commit every other dollar you can spare to severing the ball and chain that’s holding you back.

“First and foremost, the best way to grow your bank account is to pay off your debt,” said Katelynn Sortino, a freelance financial writer and owner of the site Cross Culture Love.

“I know this sounds counterintuitive, but over time you’re going to waste so much time and money paying high interest rates. Don’t even bother having more than a simple emergency savings until you have all of your debts paid off because you’re just working against your long-term financial health when all of your money is going towards interest payments. Do yourself a favor — pay off your debt first and then save. It’s my belief that you don’t actually have savings when you have debt.”

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Important: How Much You Should Have in Your Savings Account at Every Stage of Life

What Accounts Are FDIC Insured?

FDIC insurance covers savings, checking, money market accounts, and certificates of deposit (CDs). The FDIC does not insure investment products such as stocks, bonds, mutual funds (including money market mutual funds), and annuities.

2. Certificate of deposit (CD)

The main difference between a savings account and a certificate of deposit is that a CD locks up your money for a set term. If you withdraw the cash early, you’ll be charged a penalty.

CDs can be disadvantageous when interest rates are low. But they also protect savers from falling interest rates because they allow you to lock in a fixed rate.

Though longer-term CDs offer better interest rates, you’re unable to access the funds during that time without paying a penalty in most cases.

One strategy to grow your earnings is to open several CDs that mature at different times. This is called CD laddering. Laddering offers flexibility and less risk than one big CD with one maturity date. By having several short- and long-term CDs, you can take advantage of higher interest rates without too much risk and still have the flexibility to take advantage of higher rates in the future.

5. Treasury Bills

Banks and credit union deposit accounts are generally insured for up to $250,000 per depositor, per account—by the Federal Deposit Insurance Corporation at banks and the National Credit Union Administration (NCUA) at credit unions. But if you need to save more than that amount, another type of savings instrument offers security: Treasury bills (T-bills).

What Are Treasury Bills?

T-bills are short-term debt instruments issued by the U.S. government with maturities of a few days to 52 weeks. While yields might be lower than a typical high-yield savings account, they’re backed by the full faith and credit of the U.S. government, making them a safe investment. With T-bills, you’re trading security for a lower interest rate.

T-bills can offer you a short-term place to park cash and earn interest. You can hold T-bills until they mature or sell them before maturity. If you need to access the money you have in T-bills, there’s a vast secondary market, which makes them highly liquid.

How Do You Buy Treasury Bills?

You can buy Treasury bills through Treasury Direct or secondary markets, such as a broker.

Bottom Line

The best place for your savings is the one that’s the best fit for your comfort level and financial goals. Take the time to research accounts at multiple banks and credit unions, and compare interest rates and terms before opening a savings product.

Don’t forget: You can open more than one account for your savings if it helps you better organize your finances.

4. The key is to diversify

The key, experts say, is to diversify, which means have a variety of investments in different things. Don't put all of your eggs in one basket. That keeps balance, and if one investment is going down, another might be holding steady or going up.

For example, if your investments are all in tech and all of a sudden the tech sector starts sliding, so is your portfolio, Sun explained. "If you have some in tech, maybe some in health care and those more traditional companies that pay dividends," Sun said, "then your overall portfolio is a little bit better balanced."

So, try to make sure you have investments across a wide variety of sectors (such as technology, health care, retail, financial, etc.) as well as risk levels. Growth stocks, for example, can gain a lot but also lose a lot. Value stocks are more steady growth. You can also invest in currencies, commodities and riskier investments such as cryptocurrencies and NFTs. Those tend to be more volatile and complex, so you really want to do your homework — and make sure you are only investing what you can afford to lose.

It's OK to get advice from friends when investing, but you need to do your own research and you need to be diversified. If your friend says buy XYZ stock because it went up for them, don't just buy that and leave it at that. It could go down for you. So, if you're diversified, you have a cushion for that.

The greatest potential reward: Start a business

If you have a business idea that you want to pursue, the money you've saved could be your ticket to getting started.

This is the option that presents the most risk, as there's the possibility that you could spend all your money and have nothing to show for it. On the other hand, there's no limit to how much you could earn if your business takes off.

Starting a business is a big decision, so it shouldn't be something you choose to get rich quick. The other options on this list are all much safer ways to use your savings. But if you've done your homework and you feel like you could create a successful business, then it's worth a shot.

3. Consider switching banks if the rate is worth it

Butler says you should also take the time to explore other financial institutions and compare different savings accounts. 

“This is a great chance to take advantage of the rising interest rate market, and you may be able to take advantage of a welcome bonus at another bank,” adds Butler. “A lot of banks — as a result of the higher interest rates — are running special promotions, too.”

If you find a specific account that provides more compelling offers than your current bank, you might consider switching institutions. 

5. Money Market Deposit Accounts

Money market deposit accounts are offered by banks and typically require a minimum initial deposit and balance, with a limited number of monthly transactions. Unlike money market funds, money market deposit accounts are FDIC-insured. Penalties may be assessed if the required minimum balance is not maintained, or if the maximum number of monthly transactions is surpassed. The accounts typically offer lower interest rates than certificates of deposit do, but the cash is more accessible. 

5. Build a CD ladder with short-term CDs if you find a competitive rate

Butler says building a CD ladder might be ideal if you find a competitive rate and are generally risk-averse. However, if you’re not risk-averse, Butler adds there are more options you should consider first.

CD ladders offer a way to take advantage of higher interest rates on CDs. Instead of depositing all your money into a single CD and locking your deposits for a set time, you’ll split your savings into a mix of term lengths.

Bell suggests sticking to CDs under one or two-year terms. If interest rates increase during the year, a CD ladder provides enough flexibility to buy a new CD once your short-term accounts mature. 

Sophia Acevedo, CEPF Junior Banking Reporter Sophia Acevedo is a junior banking reporter at Insider who covers banking and savings for Personal Finance Insider. She is also a Certified Educator in Personal Finance (CEPF). She joined Insider in July 2021 as a fellow for the Personal Finance Insider Reviews team. Before joining the Insider team, she was a freelancer based in Los Angeles and worked briefly in publishing. She also graduated from California State University Fullerton in 2020. You can reach out to her on Twitter at @sophieacvdo or send a quick email at sacevedo@insider.com. Read more about how Personal Finance Insider chooses, rates, and covers financial products and services >> Read more Read less

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