Earn more interest on savings with these four account moves
CBS News says savers can beat basic bank rates by comparing high-yield savings accounts, CDs, online banks and money markets.
By Frankie Delgado · News Reporter
3 min read
People trying to earn more interest on savings have a clear reason to look beyond a plain bank account: CBS News, citing Federal Deposit Insurance Corp. data, reported that the typical savings account was paying 0.42% APY.
That leaves plenty of room for savers to hunt for better returns while keeping money in interest-bearing accounts, which CBS News described as a lower-risk alternative to options such as stocks or real estate. The catch is that the rate depends heavily on the account type and the institution holding the cash.
How can I earn more interest on my savings?
CBS News pointed to four main moves: open a high-yield savings account, consider CDs, use an online bank, and compare money market accounts and bank offers before choosing where to park cash.
High-yield savings accounts are the headliner. Jill Fopiano, CEO of O'Brien Wealth Partners, told CBS News that these accounts were paying about 4.5% on average, a level she said was the highest since the 2008 financial crisis.
Fopiano linked those stronger rates to the Federal Reserve’s rate increases. CBS News reported that the Fed had raised short-term interest rates 11 times since March 2022, helping push deposit-account yields higher.
For savers who can leave money untouched, certificates of deposit may be worth a look. A CD requires the saver to commit money for a set period, and Fopiano told CBS News that locking in a three- or five-year CD at then-current rates could make sense depending on when the money will be needed.
Fopiano also said deposit rates tend to move with the federal funds rate, even though Fed decisions do not directly set savings rates. If the Fed later cuts rates, she said, a CD could help preserve a higher yield for longer.
Why online banks may pay more
James Allen, founder of Billpin and a certified public accountant, told CBS News that online banks were an obvious starting point for savers chasing higher APYs. He said their savings rates can run four or five times above those at traditional branch-based banks.
Allen attributed that difference to lower operating costs. Without large branch networks and the staffing tied to them, he said, online institutions can use those savings to offer stronger deposit rates.
What is a money market account?
A money market account is a bank account that works much like a savings account but may include check-writing access. Steve Sexton, CEO of Sexton Advisory Group, told CBS News that these accounts can offer higher interest rates than standard savings accounts.
Sexton also warned that the better rate can come with strings. He said some money market accounts may charge higher fees or require larger minimum balances than other savings options.
The last move is the least flashy and often the most practical: shop around. Sexton told CBS News that some banks and credit unions offer more competitive savings rates, and that customers should also watch for new-customer bonuses.
Those offers, according to Sexton, can include cash bonuses, promotional interest rates or other perks that add value to a savings account. For savers, the message is blunt: the default account at a familiar bank may be leaving money on the table.
This story draws on original reporting from CBS News.