How to Earn More Interest on Your Savings In 2025
Interest rates are still high for savings accounts, but they differ quite a bit from bank to bank.
Opportunities for higher returns exist, such as real estate and the stock market. However, those also entail higher risk. Hence, the adage: High risk; high return.
Fortunately, as you become proactive in managing your money, you’ll find several ways to earn a better return without compromising the safety of your money.
1. Do Regular Online Research
At present, interest rates are better than they’ve been in a long time, causing consumers to search for the best ways to grow their savings.
Interest rates haven’t always been this good. It was only a few years ago that they were at .10% for savings accounts. Interest rates change more often than you might suspect, so it’s important to find the best ones right now and earn the most you can on your money.
Competition could work in your favor.
Banks, credit unions, and other financial institutions make their money by making loans on which they earn interest. Their best sources for the money they lend are the steady deposits in their savings and checking accounts. And, like other businesses, banks have to compete with other financial institutions for that money.
Generally, online banks have lower fixed costs than traditional brick-and-mortar banks. Therefore, it’s often the case that online savings accounts offer a higher return. Spending five minutes once a month to check out prevailing interest rates could reveal opportunities to earn more interest on your savings account, money market account, or CD that you wouldn’t have known otherwise.
Find the Best Savings Accounts
Finding the bank with the best savings account shouldn’t take much work. The banks featured below offer above-average interest rates on their savings accounts.
2. Be Proactive in Opening New Accounts
Inertia afflicts most of us, but it may not be a good thing when managing your money.
Keeping a set of banking accounts in place is easy once you’ve determined what you need. But many people stay with those accounts as rates drop. When better offers arrive, inertia prevents them from leaving their underperforming accounts even when they know opportunities exist elsewhere for a higher return.
People don’t stay on top of their online research because they fear the answer to the question: What would I do if I saw a higher return for my savings account advertised elsewhere?
The thought of the hassle involved with opening a new bank account is enough of a barrier, so they don’t look for opportunities to earn more interest on their money.
Not interested in chasing rates? Competitive banks usually maintain the best rates over time.
For banks that consistently offer higher rates, read: America’s Best Rates survey
Some may be reluctant to add more accounts because they suspect it could adversely affect their credit scores. Not so. No credit decision is involved when a bank or credit union opens a new savings account, and there is no penalty for owning multiple savings accounts.
To increase the annual return on your money, you need to be proactive and decide ahead of time that when you see a reasonable offer, you’ll take full advantage of it.
3. Target Accounts for Specific Purposes
Savings accounts can help you achieve financial goals like eliminating debt, saving for a house, or staging investments.
But you must leave savings untouched for long periods to earn more interest. That’s why it helps to have multiple savings accounts targeted for specific purposes.
For example, if you have an underperforming savings account, keep it – but research to find one with a reputation for consistently high rates and open that account for a different purpose. Use your existing savings account as your go-to emergency fund. Then, your new, targeted savings account balance can remain untouched for extended periods and earn more interest.
4. Consider Other Types of Savings and Strategies
The traditional savings account is not the only way to save money. Alternative savings vehicles include certificates of deposit (CDs) and money market accounts.
If you’re saving for a new car that you plan to buy in three years, you might want to pick a savings product (CD, etc.) with a longer term, higher return, and less access. But you might miss the liquidity if you save for something you want sooner. In that case, you might think about a different strategy that provides high returns and access to your funds.
Earn More Interest While Maintaining Liquidity
Certificates of deposit typically offer a higher return than a savings account because the bank can count on the money staying on the promise, enabling them to lend more of it out and earn more interest. That’s because your funds are committed for a specific term in a CD, say six months to five years.
If committing your savings for such a long time gives you pause, CD ladders can increase your annual return while giving you periodic access to your balance as you save. Here are two strategies for how to construct the ladder:
Construct a monthly CD ladder
To construct a monthly CD ladder, you split the amount you wish to commit to a CD into 12 parts. Invest the first part in January, for example. Invest the second part in February, and so forth. This way, a portion of your CD investment matures every month. If you don’t need it, reinvest it in another CD for the following year.
Construct a CD ladder for a specific date
You can also construct a CD ladder to mature at a specific date. In the example of replacing your car in three years, you would buy CDs every month, all with the same maturity date (or as close to it as you can get). This allows you to earn higher interest on the money you put in earlier.
Tax-Advantaged Savings Options
If you are saving for a specific purpose, there may be a tax-free plan from which you can benefit. A prime example is a 529 plan that allows you to save for a child’s education. The interest you earn in this type of savings plan is tax-free.
Likewise, you can save money for your retirement in a Roth IRA savings account. Contributions come from taxed income, but none of the interest accrued is taxed.
Pursuing alternative savings accounts like these may not yield a higher APY, but the tax savings result in a higher take-home yield.
5. Consider Other Types of Institutions
There are other options in addition to the various types of savings accounts banks offer. Although they may not be FDIC-insured, they are legitimate and safe alternatives. Three stand out:
Brokerage Accounts
Most online brokerages require you to open what amounts to a staging account from which you can invest in mutual funds, the stock market, and bonds. Like bank savings accounts, these usually earn a competitive rate of return. Furthermore, the SIPC protection of such cash balances makes them as safe as FDIC-insured bank savings products.
Some banks (like Bank of America) own brokerages, making it easy to move money between their savings and brokerage investment accounts.
Brokerage accounts offer you the opportunity to invest in either bonds, which pay fixed interest, or stocks, which pay dividends. To be sure, these investments do not have consumer protections like the FDIC, NCUA, or even the SIPC, but their higher risk may yield a higher return. Losing money is a possibility, which you may decide is unacceptable. Still, it is wise to be aware of these options to make an informed decision.
Credit Unions
Credit union savings accounts are practically indistinguishable from those a bank offers. Like the FDIC, the NCUA provides federal insurance (up to $250,000), making a credit union as safe as a bank. Compare their interest rates online. You may find that their rates are as reasonable as, if not higher than, those banks offer.
Fintech Options
PayPal started several years ago when it was part of eBay. Customers parked their eBay money there, and PayPal offered competitive interest rates on those deposits. There wasn’t any protection other than PayPal’s good name.
Other companies have since entered this space, some cooperating with existing banks and credit unions and others independently (like Acorns and Stash). The bottom line is they often offer higher interest than you can earn at your local bank. Those teaming up with existing banks or credit unions provide the usual FDIC/NCUA insurance, which is a sizable advantage.
