Where to Stash Your Cash

Today’s belly-low interest rates pose a real challenge if you’re trying to sock away some money. Where’s the growth, when the average savings account is paying a measly 0.20%?

Good news: We got the inside scoop from top money experts about the best places to stash your cash, depending on how soon you need it.

1) You Need to Keep Your Cash Liquid

“Bottom line: there aren't any ‘safe’ ways to earn more than about 1% right now,” says Liz Pulliam Weston, author of “The 10 Commandments of Money,” especially if you’d like to keep your money accessible (in case of a crisis, say).

You can get higher returns, notes Manisha Thakor, founder of MoneyZen, a wealth management firm, “but you often have to agree to lock up your cash for a longer period of time—as with some CDs—or you have to invest in a ‘cash equivalent’ that will involve more risk.”

Best options: An online bank or credit union account that’s FDIC-insured and is paying at least 1%. Ally Bank gets high marks from our experts. Try Bankrate, CUlookup for national listings. 

Or sign up with an institution when they’re offering higher introductory rates, Thakor suggests. A short-term teaser rate won’t help much, but if the terms are longer, it could be worthwhile.

Avoid money market funds, says Weston, because the interest rates are typically even lower than a savings account—and they’re not FDIC-insured.

Feeling geeky? To figure out who’s offering the best online rate on the day you decide to move your money, check out accounts on MoneyRates and NerdWallet.

2) You Won’t Need the Cash for a Few Years

If time is on your side, you should be able to earn a little more—especially if you “think outside the bank,” says Carmen Wong Ulrich, author of “The Real Cost of Living.”

Pay off debt. Let’s say you pay down a credit card that has 14% interest–every dollar of debt you pay off is like getting a 14% return on your money.

While that strategy saves you money, it doesn’t create a savings stash (although once you’re debt free, you can—and should—plow those old debt payments into savings).

But if you’ve got a big enough chunk of cash—$30,000 or more—and your mortgage rate is over 4.5%, you could pay down part of that loan. If you refinance to a smaller loan, you’d lower your monthly payments now (and save a bunch of interest over the long haul).

Does it make sense to do that, and then take out a Home Equity Line of Credit (HELOC) at a lower rate—perhaps 2.8% or 3.8%?

Buy CDs.

Some CDs have higher yields—coming in as high as 1.95%, but to get those rates, you will need to commit to leaving your money in the account for longer, perhaps five years, and there will be a minimum. Again, make sure that your money will be insured.

Before sinking your money into any account, of course get the lowdown on possible fees, minimum deposits, and the like. Above all, make sure that your money will be FDIC insured.

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