Can you believe the national average interest rate for savings accounts is just 0.09%? Yes, you read that right: 0.09% (not 0.9%). Leaving your money in a savings account is a terrible way to get decent returns on your investments when there are so many better (and higher paying) options available. Many of these alternatives also won’t charge you a dime to manage your savings account, something traditional banks still inexplicably do.
If you’d like to start reaping the rewards of saving, then here are some alternatives you should ditch your current savings account for better options than simple low interest savings accounts.
7 Alternatives to Low Interest Savings Accounts:
Betterment, one of the best robo-advisors out there, just launched its own Smart Saver account. Similar to Betterment’s portfolio optimization strategies, the Smart Saver account allocates deposited cash into secure investments (only bonds for the savings account), which can bring in as much as 20x higher returns on your deposits compared to a traditional savings account.
The present expected yield is 2.20%, whereas a traditional account would yield maybe 0.09% annually. There are no account minimums, no hidden fees; just a 0.25% fee in exchange for access to cutting-edge, algorithm-based savings account management.
Ally Savings Account
Similar to Betterment, Ally Bank savings accounts currently yield 2.20% on deposits and there is no account maintenance fee for Ally customers. Balances are FDIC-insured up to $250,000, you can deposit checks remotely with Ally eCheck Deposit, and there are barely any fees involved (just $7.50 for returned deposits, $25 for overdrafts, and $10 for excessive transactions).
With Ally, you also get access to 24/7 customer service and an emergency savings calculator to help you simplify your savings strategy. The only downside is that you cannot deposit cash into an Ally Savings account, though you can deposit cash if you have an Ally Interest Checking account (which yields 0.10% annually).
Synchrony High-Yield Savings
With Synchrony Bank’s high yield savings account, you could be making as much as 2.20% on your deposits (no minimum balance) and get access to 24/7 online and mobile banking. You can access your money easily through fee-free, in-network ATMs and there are 7 different ways you can add money to your account (e.g., mobile check deposit, wire transfers, personal checks, etc.).
Compared to other major banks (which offer interest rates of 0.01-0.10% for their savings accounts), Synchrony is definitely ahead of the game by offering consumers better opportunities to make their money work for them.
Discover doesn’t offer sky-high interest rates on its savings accounts, but its 2.10% annual yield is still much better than other major banks like Chase, Wells Fargo, and Bank of America. There is no opening deposit amount required (compared to $25 for Chase), no monthly fee (compared to $8/month for Bank of America), and no minimum balance required to waive the monthly fee (which ranges from $300-500 for the other major banks).
Mobile banking is also fully accessible and easy-to-use, with effortless check deposits and super-simple money transfers between accounts. If you are currently a Discover customer or would prefer to keep your money with a bigger bank than Ally or Synchrony, then don’t hesitate to switch to Discover’s online savings account to maximize your gains on deposited funds.
Wouldn’t it be great if you could just grow your savings automatically? This is the premise behind Chime’s banking app: to give consumers access to more banking options that benefit them. A Chime savings account allows you to save money on hidden bank account fees, mobilize your finances, get direct deposits 1-2 days early, and withdraw cash from over 38,000 fee-free ATMs in its network.
There are no account management, overdraft, minimum balance, or transaction fees (the only fee is $2.50 for out-of-network ATM withdrawals). While Chime doesn’t offer higher interest rates, it’s still an incredibly useful app for anyone who wants to stop paying fees on their savings accounts.
5% Interest with StreetShare
Looking for consistent returns on your investments? Whether you’re new to investing or simply want to add more bonds to your portfolio, StreetShares’ veteran business bonds could be a great addition because they offer a guaranteed 5% rate of return.
If you deeply care about reducing the veteran unemployment rate by giving more entrepreneurial opportunities to the people who served our country, then StreetShares is a socially rewarding way to invest. It’s also a financially rewarding investment opportunity, as the 5% guaranteed rate of return on its veteran business bonds is considerably higher than other types of conservative bonds currently available in the market, and the capital investments available to accredited investors are excellent additions to any high-yield portfolio.
Furthermore, veterans who want to start or grow their own business should definitely consider seeking funding through StreetShares because its emphasis on helping veterans is almost unparalleled in other areas of the financial industry. If it’s a win-win for everyone involved, then what do you have to lose by trying out StreetShares? Sign up today to start investing for as little as $25.
Certificates of Deposit (CDs)
Last but not least…certificates of deposit. They’re not as popular as they once were, but they still offer better returns than your average savings account (some yield as much as 2.50-2.65%). The main downside is that you cannot withdraw the funds before the set maturity date (or you’ll incur penalties).
So, this means you might not have access to your deposited funds for several months or even years. If you have more than enough to cover emergency expenses and you’re simply looking for a low-risk way to increase your returns on your savings account, then certificates of deposit are likely a good pick for you.
None of the above savings accounts will help you earn as much as a regular investment account would, but these options are significantly less risky in comparison to traditional portfolios mixed with stocks and bonds. You also get much quicker access to your funds in case you need cash at a moment’s notice (whereas an investment account would take a few business days, at the very least).
Why would anyone continue paying monthly fees for a savings account making less than 0.10% interest when all of these great options are available with $0 account minimums?
What about you? What are your favorite low interest savings accounts alternatives?