When it comes to managing your cash, traditional bank savings and checking accounts aren't the only options.
While banks offer security, there are numerous other places to park your money that can provide better returns and flexibility.
Here are 10 alternatives to consider, each with its own features and benefits.
Get a protection plan on all your appliances
Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.
Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.
For a limited time, you can get your first month free with a Single Payment home warranty plan.
Money market mutual funds (MMMF)
/images/2023/02/08/woman-using-online-banking-portal.jpeg)
Money market mutual funds (MMMFs) are a popular choice for those seeking higher returns than traditional savings accounts.
These funds invest in U.S. Treasuries and other high-quality fixed-income securities, aiming to offer better yields while maintaining liquidity.
Share prices are typically fixed at $1 and generate interest income. Interest earned from MMMFs that invest in municipal securities can be exempt from federal, state, and local taxes.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
Money market accounts
/images/2024/06/10/us-treasury-check-adobe.jpg)
Money market accounts combine the benefits of savings accounts and checking accounts, offering higher interest rates with the convenience of check-writing and debit card access.
These accounts are FDIC-insured up to $250,000 per depositor, providing a secure place for your cash while earning higher interest than a regular savings account.
Treasury notes
/images/2024/06/10/us-currency-fifty-dollar-bill-adobe.jpg)
Treasury notes, known as T-notes, are issued by the U.S. government and are a safe and reliable investment. They come with maturities ranging from 2 to 10 years and are backed by the full faith and credit of the U.S. government.
Treasury notes pay interest every six months and can be purchased in increments of $100, making them a stable choice for those seeking to preserve capital and earn steady income over time.
Treasury bonds
/images/2022/01/18/stack-of-bonds.png)
Similar to Treasury notes, Treasury bonds (or T-bonds) are also backed by the U.S. government. The difference is that they have longer maturities, typically 20 to 30 years, and typically provide the highest interest rates of any government-issued security.
They provide a fixed interest payment every six months until maturity and can be purchased in increments of $100.
Treasury bills
/images/2022/08/19/t-bills_treasury_bills.jpg)
Treasury bills, known as T-bills, are short-term government securities with maturities of one year or less. They are sold at a discount and mature at face value, providing a guaranteed return.
Treasury bills are highly liquid and virtually risk-free, making them an excellent cash option. They can be purchased in increments of $100 through an investment bank, a broker, or at auction on the TreasuryDirect.gov website.
Trending Stories
FDIC-insured sweep accounts
/images/2024/06/10/typing-on-keyboard-adobe.jpg)
FDIC-insured sweep accounts allow you to transfer funds that exceed or fall short of a certain threshold into a higher-interest-earning account or investment.
These accounts are often used by businesses to optimize cash flow management, but they can also be beneficial for individuals looking to maximize the interest earned on their idle cash.
With sweep accounts, you might also be able to protect amounts beyond the $250,000 FDIC limit.
Corporate bonds
/images/2024/06/10/corporate-bonds-display-on-a-monitor-adobe.jpg)
Highly rated corporate bonds can offer a relatively safe and higher-yield alternative to government securities. These bonds are issued by companies with strong credit ratings, providing a steady income stream through fixed-interest payments.
While corporate bonds carry more risk than Treasury securities, they typically yield higher interest.
Short-term bond funds
/images/2024/05/30/businessman-counts-money-adobe.jpg)
Short-term bond funds invest in bonds that mature relatively soon. These funds aim to provide higher returns than money market funds while maintaining a low level of risk.
They are a good option for those who want to earn more interest than traditional savings accounts without taking on too much risk.
Certificates of deposit (CDs)
/images/2023/10/31/certificate-of-deposit-document-on-table.jpeg)
Certificates of deposit (CDs) are time deposits offered by banks that pay a fixed interest rate for a specified term, ranging from several months to several years. They're FDIC-insured up to $250,000 per depositor and offer higher interest rates than regular savings accounts.
CDs are an excellent option for those who can commit to leaving their money untouched for a set period in exchange for higher returns.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $15 the first year with auto-renewal.
Stocks
/images/2023/10/07/businessman_investor_working_on_laptop.jpg)
While stocks are riskier than the other options listed, they can provide significant long-term growth potential. For example, a well-diversified portfolio defined by the S&P 500 has outperformed cash by 11% on an annualized basis since 1950.
Investing in a diversified portfolio of stocks, especially through index funds, can help spread risk and increase the chances of earning higher returns over many years.
Bottom line
/images/2024/06/10/dollar-bills-money-adobe.jpg)
Exploring alternatives to traditional bank accounts can help you earn higher returns and achieve better financial outcomes.
Numerous options exist to grow your savings while managing risk, from government-backed securities to corporate bonds and money market funds.
What alternative investment option will you explore next to optimize your cash and work toward a stress-free retirement? Checking your financial health regularly and considering a diversified approach can ensure you make the most of your hard-earned money.
Lucrative, Flat-Rate Cash Rewards
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.24%, 24.24%, or 29.24% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Subscribe Today
Learn how to make an extra $200
Get vetted side hustles and proven ways to earn extra cash sent to your inbox.