4 Safe Ways to Earn More Interest

Even with interest rates down, it’s still possible to get paid to save.

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Your bricks-and-mortar bank probably doesn’t pay you much interest on your savings. Many of the biggest banks are paying as low as 0.10 percent APY on their savings accounts. The national average on passbook savings is only .21 percent APY. Tiny interest rates like that are not going to make you much money on your savings. Most people would like to earn more on their money but do not want to take any more risk. But it is actually easy to make much more interest and still keep your savings in a safe, FDIC-insured account.

[In Pictures: 8 Painless Ways to Save Money.]

Online Savings Accounts

These accounts are an easy way to earn more on your money. Most accounts have no minimum deposit, no monthly fees, and are FDIC-insured. You can earn up to 1.40 percent APY on these accounts. That still isn't much, but it is several times higher than the national average for savings accounts. Check out Bank Bonuses to find the rates for some of the top online savings accounts.

Reward Checking Accounts

Reward checking accounts are an easy way to make up to 4 percent APY on your money. These accounts usually have requirements similar to these: that you make 10 or more debit card purchases a month, receive statements electronically, and have at least one direct deposit or automatic deposit a month. In exchange for meeting the requirements the bank will pay you the higher interest rate and usually refund your ATM fees as well. The maximum deposit is usually $25,000 but that amount can vary. To find a bank near you with a reward checking account conduct a search on a site such as CheckingFinder.com.

Smarty Pig

The Smarty Pig savings account currently pays 2.15percent APY. They can pay a little more interest because this account works differently than other savings accounts. For this account you need to set a savings goal and work towards it. By implementing a few workarounds you can use this account almost like a regular savings account though. Visit the SmartyPig.com web site to get more details on how this account works.

[Visit the U.S. News Personal Finance site for more insight and money management tips.]

Ally Bank 5-Year CD

The Ally Bank 5-Year CD (https://www.ally.com/bank/high-yield-cd/index.html?#tabs=ratescurrently) pays 2.74 percent APY. This is well above what the online savings accounts and Smarty Pig currently pay. The catch is that you have to lock up your money for five years. This catch is not as bad as it seems because the Ally Bank CDs have an early withdrawal penalty of only 60 days interest. As pointed out at My Money Blog, this make these CDs an attractive alternative to online savings accounts. It would take only a few months for your annualized rate to be better than an online savings account even with the early withdrawal fee. There is some risk that you might need your money before the break-even point. That risk can be somewhat mitigated by opening several CDs. Ally Bank has no minimum amount requirement on their CDs so you could spread your savings over several CDs.

These are several ways you can earn more interest on your money and still have your savings be FDIC-insured. You are not going to get rich from interest rates like these but at least you can grow your savings safely.

Andy Hough writes about frugality and living well on a small income at TightFistedMiser.com.