Are you wondering how to earn higher interest on your cash savings? The best way today is with high-yield savings accounts. The bank with the best rates I've seen is CIT Bank.
When the pandemic started, interest rates went way down. The Fed Funds rate was cut down to 0% in 2020 and only started getting lifted in March 2022. When rates are low, earning a high interest rate on your cash is hard!
At the start of 2022 the 10-year bond yield was hovering around 2%, and the most you could get on a 10-year treasury bond was around 1.88%. The second and third quarters of 2022 experienced jumps in rates. Then in Q42022, the 10-year bond yield rose above 4%. By April 2023, the yield dropped down to around 3.34%.
In addition, the Fed Funds Rate (FFR), which is controlled by the Federal Reserve, is ranging between 5.25%-5.5% as of August 2023.
If you want to earn higher interest on your cash savings, rates are clearly much better now than during the pandemic. This is the positive benefit of the Fed rate hikes.
Higher Interest Available Again On Some Money Market Accounts
During the pandemic, many online-only based banks were only offering around 0.50-0.60% interest. Thankfully, some banks are offering more than double that now. If you've only banked with your local bank or haven't checked rates recently, it's time to look to the web.
Online-only banks generally offer much higher APYs for customers due to lower overhead. For example, even though 0.50-0.60% was low, it was a lot better than the 0.10 – 0.01% many traditional banks were offering.
Now, rates are notably better. For example, as of 3Q 2023, CIT bank is offering 1.55% APY on money market accounts, a significant jump higher.
And CIT is also offering a 5.05% APY on Platinum Savings account balances of $5k+. And their Savings Connect accounts are offering 4.65% APY (Rates subject to change) on all balance amounts. Both account types have low $100 minimum initial deposit requirements.
Earn Higher Interest Through Promotional Rate CDs
You can also earn interest through CDs (certificate of deposits). Interest rates were incredibly low during the pandemic, but have become a lot more attractive with 2023 approaching. CDs are typically slightly higher than high yield savings and money market rates.
A trend I've observed is noticeably higher promotional rates on certain CD products at CIT Bank. For example, at the time of writing, they are offering 5.0% on 6-month CDs, 4.65% APY on 13-month CDs, 4.6% on 18-month CDs, and 4.9% APY on no-penalty 11-month CDs. (Rates subject to change)
Check out CIT Bank's latest CD offerings today by clicking the button below. Make sure to compare all of their different terms to check for promotional rates.
And, if you've never opened a CD account before, the great news is it's super easy. It takes just three basic steps and you're on your way to earning higher interest.
Short-term CD rates also allow you to easily build a CD step stool or a CD ladder so you'll always get the highest possible interest rate to minimize your cash drag. I plan to open up another short-term CD and keep going from there with about 10% of my investable assets.
How To Earn A Higher Bank Savings Interest Rate
You've probably heard about folks with a bunch of credit cards who travel around on free flights using addictive rewards points. If you don't have much money or have a lot of time on your hands, managing a lot of credit cards that way might be worth it.
I have a minimal number of credit cards, however, because I'd rather focus my time making lots of money online, through side hustles, or through my investments.
That said, I still like to earn free money here and there with little work. Therefore, the best thing everyone can do to raise their bank savings interest rate is through bank rewards!
Banks Want More Deposits
I've also noticed banks are getting hungrier for deposits. For example, take a look at these promotions I got in the mail from two banks.
The first offer is pretty incredible. First Republic is willing to give me $500 if I open up a checking account with only $3,500! All I have to do is maintain a minimum balance of $3,500 for three months and I'm good to go. That's a 14.2% return.
The second offer isn't as good, but I still get $500 if I keep $15,000 with a Chase savings account for at least three months and open a checking account as well. That's a nice 3.3% return in three months, or 13% annualized.
Related: The Different Types Of Banks To Choose From
Bank Promos Can = Free Money
If you're looking for some free money, it's worth going to various new bank branches and ask if they have any special promotions going on. Check online as well with banks like CIT Bank, which offers some of the best high-yield savings rates and CD rates.
Taking advantage of promotions is like a safe way to hack your way to get free money. All you'll get is a 1099-INT statement at the end of the year to file with your taxes. It's easy!
I'll be using my free $500 to buy me some new overpriced jogging pants as part of the Samurai September, spend more money initiative! Whoo hoo! Sigh, I don't think I can ever find a way to simply spend money without trying to earn money first.
Most importantly, take this rising interest rate opportunity as motivation to SAVE MORE MONEY. The more you save, the easier it is to achieve financial freedom through passive income.
Alternative To Higher Interest On Your Cash Savings
Rates can change a lot from one year to the next. And in recent years it was very hard to get a higher interest on your cash savings. Low interest rates are one of the main reasons why risk assets like stocks and real estate have done so well when rates dropped. When the opportunity cost of holding risk-free cash is low, people usually decide to invest more.
If you're looking for an alternative way to get higher interest on your cash savings, I suggest investing in real estate. It's my favorite asset to build long-term wealth. Real estate generates income, provides shelter, and is a stable asset that grows with inflation.
I'm currently generating about $300,000 a year in passive income so I don't have to work a day job anymore. It's taken me 22 years to get to this level. But once I was able to earn my first $1,000 in annual passive income, I just got motivated to keep going.
Financial Freedom Through Investing
Saving money is great. But you need to also invest your money wisely so it can work for you. My favorite investment post-pandemic is in rental properties and real estate in general. The value of hard assets is going up due to inflation. Further, the value of cash flow has gone way up because interest rates have come way down.
Here are my two favorite real estate investing platforms. I have invested $810,000 in real estate crowdfunding so far to earn a higher interest on my cash.
Fundrise: This platform offers a way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Manage Your Finances Wisely
Once you have a higher savings interest rate, you should diligently track your net worth. Use a free online financial tool like Empower Personal Dashboard. Their tools allow you to manage your cash flow, analyze your investments for excessive fees, calculate whether you are on track to retire comfortably, and plan for your future.
That which is measured can be improved. Don't be like the majority of Americans just winging it with their finances. They're going to wake up 10 years from now wondering where all their money went! I've used their free app since 2012 and have seen my net worth soar.
Now you know how to earn a higher bank savings interest rate. With inflation picking up post-pandemic, it now takes $3 million if you want to be a real millionaire. Although it's hard to just save your wealth to wealth, earning as high of a savings interest rate is wise.
Put your money to work for you using bank promotions, high-yield CDs, the best savings account interest rates, bank rewards, and investing.
Further Reading
Be sure to check out The Latest Top Financial Products to increase your wealth, freedom and confidence.
In addition, open A Free Wealth Management Account to quickly calculate your net worth, plan for retirement and improve your financial health.
About the Author: Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world.
During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $300,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.
* The rates listed above are based on those at the time of publication and are subject to change.