Nov 2, 2024 Current Resources

6 Profitable Alternatives To A Traditional Savings Account

(TheDailyCurrents.com) – Using a traditional savings account and regularly adding to it is a great start to becoming financially stable. Could your savings be doing even more for you right now though? The following are six alternatives to your traditional savings account that offer more profitable returns or interest.

Rate to Beat: The national average savings account produces around .23% APY, according to Bankrate.

Traditional Savings Account Alternatives

If you prefer to stick with a bank-backed, safe option to increase your yield, check out these other types of accounts that provide higher interest.

1. High-yield Savings Account

A high-yield savings account works similarly to your traditional savings account but offers a higher annual percentage yield (APY). Although some banks charge a maintenance fee or restrict withdrawals, this type of account offers a fairly easy way to generate more interest with no risk and minimal inconvenience.

According to NerdWallet, a high-yield savings account will produce on average 3% APY.

2. Money Market Account

A money market account (MMA) is a good choice if you are looking to roll your current savings into an account that offers a greater interest rate. An MMA earns interest based on how much money is in the account, so the variable interest rate can work in your favor.

The average interest range for an MMA is between 0.01% and 3.45%, according to SmartAsset.

3. Certificate of Deposit

A certificate of deposit (CD) is a federally insured savings account that allows you to deposit money for a certain term with your bank, and then withdraw the money at the end of the term with it has gained interest. The interest rates offered by CDs are higher than traditional savings accounts and are a safe option for saving because they are protected by the FDIC.

The national average for a 1-year term CD is 1.49%, according to NerdWallet.

Investment Opportunities

When looking into investing with fairly safe yields, look into opportunities that have a reputation of working with the markets to consistently offer profitable returns.

4. Series I Savings Bond

The U.S. government offers Series I savings bonds. These bonds are backed by the government, making them a safe option. You receive your interest rates twice a year but risk losing some of the expected interest if you redeem your bond before five years have passed.

The current interest rate for Series I Savings Bonds is 6.89%.

5. Real Estate Crowdfunding

Real estate crowdfunding companies allow an investment company to purchase real estate using funds from multiple sources and return the money to investors with the increased value of the real estate over time. These investments are based on physical property, so you know your money is being invested in real assets.

Shorter-term real estate crowdfunding averages returns in the 10%-12% range, though these projects can require higher initial investments.

7. Alternative Investment Platform

Alternative investment platforms are fairly common on the internet. These platforms create investment opportunities by means of diverse asset classes, like cryptocurrency, artwork, structured notes, and real estate.

Because alternative investment platforms cover such a wide amount of potential assets, it is difficult to find an average return. However, one popular option is explained more here.

Bottom Line

There are many ways to make your savings work for you and generate interest. After examining options from bank-backed high-yield savings accounts to working with an alternative investment platform, there are many opportunities available to you to create more interest and income than just a traditional bank account. Carefully analyze what you need from your savings, and create a portfolio that will work for you for years to come.