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The Best Places for Your Short-Term Savings

It’s time to give yourself a ten-second financial check-up:

  • Are all of your hard-earned dollars earning interest?

Savvy investors know that every dollar deposited at a bank, brokerage, or financial institution should be making money… and that includes your short-term savings, cash investment balances, even your checking account. If not, you should be looking for somewhere else to store your dollars…

There are a number of financial institutions that are showing their customers love by rewarding them with good returns on their short-term savings. So where is the best place for short-term savings? Let’s take a look:

High Yield Savings Accounts

I’ve been saving with Capital One 360 online savings account since 2006; their combination of security, a great online interface and the ability to save for multiple goals within one account make it a great choice.

View a complete list of top high yield savings accounts.

Interest-Bearing Checking Accounts

Your checking account should be paying you interest on your money. That may sound surprising, but it shouldn’t be. Banks should pay you for the privilege of holding your money. Most commercial banks either don’t pay interest on checking accounts or require huge minimums to pay a low interest rate. If you want to earn interest on your checking account, you should take a look at online banks.

FNBO Direct is paying account holders a 0.65% APR on new bill-pay accounts. This interest rate is higher than the rate that commercial banks are currently paying on savings accounts. The minimum balance to open a new account is just one dollar. Open an FNBO bill-pay account now.

Certificates of Deposit

Savers that are looking for the best return on their money on a long-term basis should take a look at a certificate of deposit. CD’s have terms that typically run from a period of 3 months to 5 years. Rates will increase as the CD term gets longer.

You can get the best rate on a CDs by shopping online, as these change quite often. Most CDs will have minimum deposits of $500 or more, and patient investors can get a higher rate on a longer term CD.

View a complete list of the best CD rates.

Online Stock Brokers

Just start investing. Opening an investing account is easier than ever with dozens of online stock brokers to choose from. Buying stocks or mutual funds isn’t expensive, either. For example, take a look at TradeKing.com which charges just $4.95 for every buy and sell transaction.

Now that you are aware of the best rates available, you can negotiate a better deal for your money. Be sure to look for the maximum rate that you can earn on guaranteed investments like savings accounts, checking accounts, and CD’s. Remember that every extra dollar that you earn in interest is one less dollar that you have to work for.

Do you know of any other investments that are paying investors a decent rate on short-term cash savings?

Published or updated on November 1, 2010

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  1. David Cole says:

    Where would all of you put extra cash that I might want quick access to but still earns good intrest. I all ready contribute $5,000 a year to my Roth IRA. I have a money market account for my EF. But I have extra money that I might want to tap into one day say for a house or something to that nature. Right now it is just in a Saving account. Is it a good idea to look into just a mutual fund for this?

  2. Jerrica says:

    I am in love with my small-town bank. I currently have a checking account with them with no minimum balance, and 2.75% APY. its wonderful. No monthly fees if you follow the stipulations: use your debit card at least 10 times a month (easy.) and have Direct Deposit or at least one automatic withdrawl per month. Best thing I’ve ever switched to. Ever.

  3. I think it’s important that people work to maximize their return on the cash they are holding. Cash in and of itself is trash, it needs to be moving and fluid in order for it to be of value. By earning the maximum potential from your money you will ensure that you retain the most value for your paper assets.

  4. Brian says:

    Interest rates have been low for a long time, but I still have a hard time thinking of a 1.x% interest rate as “High Yield”

  5. Keith says:

    In regards to “High Yield Savings Accounts”, the best one I have found so far is Sallie Mae– they have a 1.4% APY.

  6. Nick says:

    I can’t help but comment on the fact that there are people out there taking his concept to the extreme…or maximizing it. those practicing infinite banking are able to be sure that they are always gaining interest, and never lose any opportunity cost.

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