One of the most popular posts I’ve written on this blog is a post I wrote some time ago about how I’m able to put away as much as $50,000 in FDIC-insured savings accounts that earn a guaranteed 5% interest. It’s probably my most commented-on post, garnering well over 500 comments in its lifetime.
It’s easy to see why this post received so many comments when you think about the climate we were in not too long ago. A few years back, interest rates were really low. At best, you could expect around 1% interest on cash parked in a savings account. Meanwhile, at my peak, the savings accounts I was using allowed me to put away as much as $50,000 earning 5% or more interest. It took work, but the difference in interest rate (1% vs. 5%), made it well worth it to me.
The interest rate climate today is dramatically different today. Now, getting a good rate from your savings account doesn’t require jumping through a bunch of hoops or setting up elaborate systems. Today, you just need to know where the best places are to park your cash. At a minimum, you should be getting 4% or more interest on your cash. If you’re getting anything less than that, consider it an insult.
With that said, in this post, I want to discuss the main strategies I’m using to maximize my cash savings in today’s interest rate climate, including my favorite places to park my cash to maximize my savings.
- Use Raisin To Get 5% Or More Interest
- Use A High-Yield Savings Account From Ally, Discover, or Marcus by Goldman Sachs
- Set Up A 6.17% Interest Account With Digital Federal Credit Union (DCU)
- Open An H-E-B Debit Card Account For 6% Interest On Up To $2,000
- Use Your Cash For Bank Account Bonuses
- My 5% Interest Savings Account Strategy
Use Raisin To Get 5% Or More Interest
My current favorite option to maximize my cash savings is via a website called Raisin. At the moment, you can earn over 5% interest on any money that you save in your Raisin account.
So what exactly is Raisin? In short, it’s a platform that gives you one-stop access to different banks and credit unions offering higher-than-normal interest rates. Here is how Raisin describes itself:
Raisin is not a bank. It is a digital savings marketplace where you can fund federally insured deposit products with a wide range of maturities and APYs (annual percentage yield) offered by our partner banks and credit unions, allowing you to design a savings strategy customized to your earning and liquidity needs.
That might seem confusing, but it’s actually very simple once you open an account and see what Raisin is for yourself. When you open your Raisin account, you get access to 40 or more savings accounts from different banks and credit unions. These banks partner with Raisin to be featured in their marketplace, offering high interest rates to customers. For the banks, this is part of their marketing/advertising budget. By partnering with Raisin, they gain new customers and get more funds deposited to their bank. Customers, meanwhile, are able to maximize the interest rates on their savings accounts and get a single website to manage all of their savings accounts.
To use Raisin, you first create a free account, then pick one of the partner banks on the Raisin platform. This becomes the bank that you store your funds in. You can use multiple banks if you want and move funds between different banks, so you aren’t tied to one bank account. Importantly, any funds you save in Raisin are FDIC or NCUA-insured. Raisin has a helpful FAQ on its website that makes it clear that all of your funds – even funds in custodial accounts – are insured via pass-through coverage. Specifically, Raisin states the following:
Although Raisin customers’ deposits are pooled in omnibus custodial accounts, there is no impact on the eligible deposit insurance coverage you receive from the financial institution holding your savings. This is because the government entities providing federal deposit insurance — the FDIC for banks and NCUA for credit unions — permit pass-through coverage. So your money has the same coverage in a custodial account as if it were held in an individual account in your name.
In short, Raisin is safe to use and any money you save in Raisin has the same protections as any other bank account. That makes Raisin a no-brainer savings account option for me. Most importantly, Raisin is completely free and has no minimum balance requirements or any other weird hidden requirements.
When you sign up, you do have to pick a bank to save with. I initially signed up with Western Alliance Bank, but they stopped taking new customers since they reached their deposit goals. However, there are still dozens of banks on Raisin offering 5% or more interest. CloudBank is the one I’m recommending right now that’s currently offering over 5% interest.
If you’re looking to maximize the interest rate on your savings accounts, I recommend starting with Raisin first.
Open A High-Yield Savings Account With Ally, Discover, or Marcus by Goldman Sachs
The next simple option to maximize the interest rate on your savings is to opt for a traditional high-yield savings account from the larger banks.
My favorite high-yield savings accounts are Ally, Discover, or Marcus by Goldman Sachs. These three banks all offer similar interest rates (currently around 4%). They also charge no fees and have no minimum balance requirements. I also support these three banks because they have good customer service and well-designed websites.
My favorite of these three is Ally, which is the bank I use for my primary checking account and short-term/medium-term savings. I utilize a lot of sub-savings accounts for shorter-term goals and Ally makes it easy to open and close new savings accounts as needed. That being said, Discover and Marcus by Goldman Sachs also offer these same features, so feel to try them all out and see which one makes sense for you.
One thing to consider is that Discover regularly offers a bonus for new customers, so I’d wait to open a Discover savings account when they’re offering a bonus. Here’s a post I wrote about getting the Discover Savings Account bonus.
Marcus by Goldman Sachs also regularly offers a bonus each year and they let you keep getting that bonus every year, so it’s worth getting a Marcus account just for that option.
Set Up A 6.17% Interest Account With Digital Federal Credit Union (DCU)
If you want to take your cash savings to the next level, my next recommendation would be to set up a savings account with Digital Federal Credit Union (DCU). DCU is an online credit union with a savings account that gives you 6.17% interest on your first $1,000. If you have a two-person household, you can have $2,000 earning over 6% interest. My understanding is that you can also open custodial accounts for children in your household, which adds another $1,000 per child earning high rates of interest (I haven’t done this yet, but I may consider trying it out).
As for safety, DCU is a credit union that is federally insured by the NCUA (that’s the FDIC equivalent for credit unions). This means your money is safe and has no risk of loss (the same as money in a traditional bank account). DCU is also a normal bank and doesn’t require any specialized setup. The savings account has no fees, so this is an easy account to park $1,000 in and let it sit.
When you sign up for this account, make sure to save your Member ID number somewhere, as you’ll need that to set up online access. Otherwise, opening this account is fairly straightforward.
One thing to note is that you need to be a member of a participating organization to open an account with DCU. The cheapest organization you can join is Reach Out For Schools, which requires a one-time $10 donation. In the application, there will be a section where you can make your donation and become a participating member, which then makes you eligible to open a DCU account. Paying $10 to join this organization is worth it since you’ll get your money back from the interest you earn, plus you’re donating to a non-profit that raises money for schools.
DCU also offers a signup bonus if you open a free checking account. This is probably worth doing if you’re already going to open a savings account too. To earn the bonus, you have to open a free DCU checking account using a referral link, then either have a direct deposit or do five debit card transactions in the same month. If you’re interested in getting the DCU referral bonus, I wrote a step-by-step guide that details exactly how to earn your $20 DCU referral bonus.
Open An H-E-B Debit Card Account For 6% Interest On Up To $2,000
If you still feel like maximizing your interest rate, then you’ll want to look at the H-E-B Debit account, which offers 6% interest on your first $2,000. Be aware that there is some setup work if you want to open this account. It can also be a bit finicky. The first time I opened it, they closed it immediately, but then a few months later, I got an email from H-E-B telling me that my account had been closed in error and was now reopened. I have no idea why that happened, but I’m not complaining.
The H-E-B Debit account works the same way as the Netspend accounts, so you’ll want to check out my Netspend guide to get a better understanding of how to use this account. The short of it is you open the H-E-B Debit account, get your card in the mail and activate it, then transfer $2,000 onto the debit card. You should then be able to open the savings account and move the money into it.
I’ve also written an in-depth post specifically about the H-E-B Debit Account that’s worth checking out: The H-E-B Debit Card 6% Interest Savings Account. Be sure to read these posts to understand how the account works, because unlike Raisin or DCU, this account does have fees unless you set it up properly.
I’d say most people probably won’t need to use the H-E-B Debit account, but I’m sure there are some people out there who like to optimize every bit of their finances and will want to get 6% interest on some of their cash.
Use Your Cash For Bank Account Bonuses
One of the most underrated things you can do to get a better return on your cash is to use your excess cash to qualify for bank account bonuses. As a brief introduction, there are a ton of banks out there that will offer you signup bonuses if you open a bank account with them and meet certain requirements. These requirements typically include some sort of direct deposit requirement, a minimum balance requirement, and/or a debit card transaction requirement. It does take work to do all of this stuff – but it’s a great way to use your idle cash in a way that gets you way more than you can get from a normal savings account.
As an example of the kind of return you can make from bank account bonuses, over the past 5 years or so, my wife and I typically earn $7,000 to $10,000 per year from bank account bonuses.
It definitely takes some work to get bank account bonuses, but if you’re the type of person who likes figuring things out, this is a good way to earn more money on your idle cash. I wrote a huge 7,000 + word guide on how bank account bonuses work. Make sure to check it out here if you want to understand how you can incorporate bank account bonuses into your financial system: The Ultimate Guide to Bank Account Bonuses.
A few of the easier bank bonuses to start with include:
- Chime Bank Referral Bonus: Step By Step Guide
- SoFi Money Referral Bonus: Step By Step Guide
- Webull Referral Bonus: Step-By-Step Guide
- M1 Finance Referral Bonus – Step-By-Step Guide
- Lili Referral Bonus – Step By Step Guide
- Nearside Business Checking Referral Bonus – Step By Step Guide
My 5% Interest Savings Account Strategy
I’ve pretty much explained my new strategy to get the maximum return on my cash but thought I’d recap it below for convenience’s sake. Basically, I’ll be doing a multi-prong strategy when it comes to my idle cash where I use these super-high-yield savings accounts and keep money on the side for bank bonuses. Here’s what I’m doing:
- Use Raisin for My Emergency Fund and Long-Term Savings. Raisin is a no-brainer to me and is my top choice for most people. I use Raisin to store my emergency fund and then for any longer-term savings goals I have. Getting 5% or more interest without having to do anything and with no risk of loss makes this the way most people should maximize their cash savings.
- Use Ally, Discover, and Marcus by Goldman Sachs for Short-Term and Medium-Term Goals. After Raisin, I keep my short-term and medium-term savings in my Ally, Discover, and Marcus by Goldman Sachs bank accounts. I have things divided up between all three banks. Discover is mainly for savings for my rental income so that I can earn some interest on the cash I keep on hand for my rental property. Ally and Marcus are for personal goals that I’m saving toward.
- Use DCU for the 6.17% Interest Accounts. These accounts require no work to set up or maintain – they’re just regular bank accounts with no fees. I keep $1,000 in my 6% DCU savings account and another $1,000 in my wife’s 6% DCU savings account. I already had these accounts set up and since they don’t require any work on my end, I leave them open.
- Use the H-E-B Debit account for 6% Interest. I probably wouldn’t go through the hassle of opening an H-E-B Debit account today, but since I already have the account open for me and my wife, I leave $2,000 in there for me and $2,000 for my wife. I have an auto-transfer into and out of the account every two months to avoid inactivity fees. Again, I already had this setup and running on auto-pilot, so it’s not work for me to leave it open.
- Take Advantage of Bank Bonuses. I try to keep $20,000 or so set aside, which I can then deploy for various bank account bonuses. Over the past three years, I’ve consistently been able to earn at least $10,000 from bank account bonuses. I keep the money in a normal high-yield savings account when it’s not being used for bank account bonuses, and look to use the money whenever I find a good bonus somewhere. If you’re looking for a list of current bank account bonuses, Doctor of Credit keeps the definitive list here. And make sure to read my Ultimate Guide to Bank Account Bonuses if you’re new to the world of bank account bonuses.