When it comes to managing your cash, traditional bank savings and checking accounts aren’t the only options.
While banks offer security, there are numerousother places to park your moneythat can provide better returns and flexibility.
Here are 10 alternatives to consider, each with its own features and benefits.
Featured partner offer
4.2
FinanceBuzz writers and editors score products and companies on a number of objective features as well as our expert editorial assessment. Our partners do not influence our ratings.
Robinhood Benefits
- Earn more interest on your uninvested cash with 5.00% APY (as of April 12, 2024)
- Get up to $50K of your deposits instantly, so you can jump on investment opportunities faster
- Borrow money to increase your buying power with margin investing at 8% (as of Nov. 15, 2023) APY for Gold members
4.2
FinanceBuzz writers and editors score products and companies on a number of objective features as well as our expert editorial assessment. Our partners do not influence our ratings.
Join Robinhood Gold here
Money market mutual funds (MMMF)
Studio Romantic/Adobe
Money market mutual funds (MMMFs) are a popular choice for those seeking higher returns than traditional savings accounts.
These funds invest in U.S. Treasuries and other high-quality fixed-income securities, aiming to offer better yields while maintaining liquidity.
Share prices are typically fixed at $1 and generate interest income. Interest earned from MMMFs that invest in municipal securities can be exempt from federal, state, and local taxes.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
Money market accounts
Rix Pix/Adobe
Money market accounts combine the benefits of savings accounts and checking accounts, offering higher interest rates with the convenience of check-writing and debit card access.
These accounts are FDIC-insured up to $250,000 per depositor, providing a secure place for your cash while earning higher interest than a regular savings account.
Treasury notes
FATIR29/Adobe
Treasury notes, known as T-notes, are issued by the U.S. government and are a safe and reliable investment. They come with maturities ranging from 2 to 10 years and are backed by the full faith and credit of the U.S. government.
Treasury notes pay interest every six months and can be purchased in increments of $100, making them a stable choice for those seeking to preserve capital and earn steady income over time.
Get a personalized financial plan to reach your goals faster
73% of Americans rank finances as their chief stress in life, according to a recent study.1 If you’re part of that 73%, J.P. Morgan Personal Advisors could help ease that stress.
Schedule your free one-on-one financial planning session with J.P. Morgan Personal Advisors,2 and you’ll get access to a team of fiduciary advisors who will create a personalized financial plan catered to your lifestyle and financial goals.
Working with an advisor may sound scary, but J.P. Morgan’s advisors are fiduciaries, so you can be confident that any advisor you work with has your best interest at heart.
Book your free financial planning session here
Paid Non-Client Promotion
FinanceBuzz doesn’t invest its money with this provider, but they are our referral partner. We get paid by them only if you click to them from our website and take a qualifying action (for example, opening an account.)
SPONSORED
Treasury bonds
larryhw/Adobe
Similar to Treasury notes, Treasury bonds (or T-bonds) are also backed by the U.S. government. The difference is that they have longer maturities, typically 20 to 30 years, and typically provide the highest interest rates of any government-issued security.
They provide a fixed interest payment every six months until maturity and can be purchased in increments of $100.
Treasury bills
momius/Adobe
Treasury bills, known as T-bills, are short-term government securities with maturities of one year or less. They are sold at a discount and mature at face value, providing a guaranteed return.
Treasury bills are highly liquid and virtually risk-free, making them an excellent cash option. They can be purchased in increments of $100 through an investment bank, a broker, or at auction on the TreasuryDirect.gov website.
FDIC-insured sweep accounts
Oleksii/Adobe
FDIC-insured sweep accounts allow you to transfer funds that exceed or fall short of a certain threshold into a higher-interest-earning account or investment.
These accounts are often used by businesses to optimize cash flow management, but they can also be beneficial for individuals looking to maximize the interest earned on their idle cash.
With sweep accounts, you might also be able to protect amounts beyond the $250,000 FDIC limit.
Grow Your $$: 11 brilliant ways to build wealth after 40
Corporate bonds
Thanthara/Adobe
Highly rated corporate bonds can offer a relatively safe and higher-yield alternative to government securities. These bonds are issued by companies with strong credit ratings, providing a steady income stream through fixed-interest payments.
While corporate bonds carry more risk than Treasury securities, they typically yield higher interest.
Short-term bond funds
vetkit/Adobe
Short-term bond funds invest in bonds that mature relatively soon. These funds aim to provide higher returns than money market funds while maintaining a low level of risk.
They are a good option for those who want to earn more interest than traditional savings accounts without taking on too much risk.
Certificates of deposit (CDs)
Andrii/Adobe
Certificates of deposit (CDs) are time deposits offered by banks that pay a fixed interest rate for a specified term, ranging from several months to several years. They're FDIC-insured up to $250,000 per depositor and offer higher interest rates than regular savings accounts.
CDs are an excellent option for those who can commit to leaving their money untouched for a set period in exchange for higher returns.
Stop missing out on potentially $1,000s of basically free money with this account
If you’re not using a high yield savings account already, we just have one question: WHY?! Maybe you don’t think it’s worth your time to transfer from a traditional savings account … but by not switching, you could be missing out on $1,000s of basically free money. Here’s why:
The Customers Bank high yield savings account offers a rare 4.76% APY3 (annual percentage yield) — compare that to national average APY of 0.45% (as of June 12, 2024). This could be worth hundreds, even thousands of dollars in practically passive income.
To put it another way, in a traditional savings account with the national average APY, a $50,000 deposit would only earn $1,189 with daily compounding interest in 5 years. With Customers Bank, that same $50,000 deposit could yield over $15,200 in the same time frame.4
Open an account today — it takes minutes, and there’s almost zero excuse not to. Customers Bank is powered by Raisin, there are NO fees, and you can withdraw your money whenever you need it. Plus, with FDIC insurance, Customers Bank provides a more secure online banking experience and a safer place to store your extra cash.
Limited Time Bonus: Earn up to $2,000 when you refer friends and family to Raisin. Visit site to learn more.
Click here to open a Customer Bank high yield savings account
SPONSORED
Stocks
Pravit/Adobe
While stocks are riskier than the other options listed, they can provide significant long-term growth potential. For example, a well-diversified portfolio defined by the S&P 500 has outperformed cash by 11% on an annualized basis since 1950.
Investing in a diversified portfolio of stocks, especially through index funds, can help spread risk and increase the chances of earning higher returns over many years.
Bottom line
SkyLine/Adobe
Exploring alternatives to traditional bank accounts can help you earn higher returns and achieve better financial outcomes.
Numerous options exist to grow your savings while managing risk, from government-backed securities to corporate bonds and money market funds.
What alternative investment option will you explore next to optimize your cash and work toward a stress-free retirement? Checking your financial health regularly and considering a diversified approach can ensure you make the most of your hard-earned money.
More from FinanceBuzz:
- See what could happen if you add fine art to your investment portfolio
- Must-have investing apps for June 2024
- 10 brilliant ways to build wealth after 40
- Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
Choice Home Warranty Benefits
- First month free
- Protection for unexpected expense
- 24/7 claims hotline
- Network of over 15,000 technicians
Get a free quote