5 Alternatives to Savings Accounts

Other savings products and accounts to consider

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A savings account is one option if you’re looking to stash money away to remodel your home, buy a new car, or go on vacation. It’s also a good place to save money for an emergency fund or college fund.

And while savings accounts are usually good places to store money you need regular access to, they’re not the only option. There are alternatives to savings accounts that earn interest and can also give you relatively easy access to your money. From high-yield checking accounts to certificates of deposit (CDs), consider all of your savings options so you can choose the ideal saving solution for your needs and goals.

Key Takeaways

  • Alternatives to traditional savings accounts include certificates of deposit (CDs), money market accounts, high-yield checking accounts, Treasury bonds, and online savings accounts.
  • Different types of savings products and accounts offer different interest rates and terms.
  • Consider how long you need to tie up your money in order to earn interest and how accessible your money is in case you need it.
  • The right savings account depends on your situation, needs, and specific savings goals.

Certificates of Deposit (CDs)

A certificate of deposit, or CD, is a type of account where you save your money for a set amount of time in order to earn a fixed amount of interest. When you open a CD, you’ll need to make a minimum initial deposit and choose a CD term. The CD term is the length of time you agree to keep your money in the CD. While CD terms vary by lender, they typically range from three months to five, and sometimes even 10 years.

Generally, the longer the CD term, the higher the interest rate. Some lenders offer shorter-term promotional CDs that come with higher rates. Since CD rates are almost always fixed for the entire term, you can easily calculate how much interest you’ll earn by the end of the term. The downside, however, is you’ll be on the hook for an early withdrawal penalty if you need to pull the money out of the CD before it matures.

While a CD is less liquid than a savings account, it can often yield higher returns. For example, in September 2022, the national average interest rate for a one-year CD was 0.60%, while the national average interest rate for a savings account was 0.17%.


The CD laddering technique may help you keep your money more liquid. This technique requires that you open multiple CDs with various terms, such as three months, six months, and one year, all with different interest rates. When a CD matures, you can take your money out and use it, or deposit it into another CD.

Money Market Accounts

You can think of money market accounts as hybrids between checking and savings accounts. Once you open a money market account, you can write a certain amount of checks each month and even make purchases with a debit card. The main benefit of a money market account is that it typically earns a higher interest rate than a checking or savings account.

For example, in September 2022, the national average interest rate for a savings account was 0.17%, but a money market account had a slightly higher national average interest rate of 0.18%, according to the FDIC.

You may have to meet monthly minimum deposit requirements or pay maintenance fees with a money market account. Also, there will be a limit on how many transactions you can make each month. Most money market accounts only allow for six withdrawals, account transfers, debit purchases, or check payments per month. If you exceed this limit, you might be charged a penalty.

High-Yield Checking Accounts

High-yield checking accounts, which often are offered by online banks that have high-yield savings accounts, are also places to build an emergency fund or work toward another financial goal. They’re essentially traditional checking accounts that also pay interest. To qualify for the highest rate, you’ll need to meet certain requirements, which vary by bank or credit union. For example, you may need to commit to a set number of debit transactions per month and sign up for online banking. On the flip side, some high-yield checking accounts may offer perks such as getting access to your paycheck early with direct deposit or reimbursements for all ATM fees.

High-yield checking accounts can offer interest rates comparable to savings accounts. For example, in October 2022, Paramount Bank offered an interest checking account with an annual percentage yield (APY) of 2%.


Interest rates on all types of interest-bearing products and accounts will vary depending on the Fed funds rate and the economic environment in which we are living. The Federal Reserve determines interest rates and has the power to change them during Federal Open Market Committee meetings throughout the year.

Treasury Bonds, Bills, Notes, and More

U.S. Treasury bonds, bills, notes, and more (sometimes called Treasurys) are fixed-income securities that are issued and backed by the federal government. They are often considered some of the safest investments you can possibly make.

These Treasury investments come with maturities ranging from four weeks to 30 years, depending on the bill, note, or bond. They are typically sold in increments of, say, $100 at TreasuryDirect.com. Interest rates will vary, but are competitive with others on this list. For example, a 20-year Treasury bond issued on Sept. 30, 2022, had an interest rate of 3.375%.

Like the other options on this list, Treasury bonds guarantee a specific rate of return, so you don’t have to worry about losing money on an investment such as if the stock market is volatile. Additionally, Treasurys are only subject to federal taxes and are exempt from state and local taxes.


Treasury inflation-protected securities (TIPS) work similarly to bonds but the value fluctuates with inflation, so if inflation rises, so will the interest rate you can earn.

Online Savings Accounts

While it’s not technically an alternative, an online savings account is a different type of account than the one offered at your typical brick-and-mortar bank or credit union. An online-only savings account will usually come with many of the same features and rules as traditional accounts, but it historically has offered higher interest rates. That’s because online-only institutions have less overhead, so they’re able to charge less fees. Online savings accounts may also come with perks you can’t find at an old-school bank.

However, you must be comfortable with online banking to take advantage of these accounts. You’ll likely need to transfer the money from one bank to another via an online account, although check with the account provider to see if there's another way to deposit your money. You also won’t have access to in-person services at a local branch, but you may be able to call or chat online with customer service.


In September 2022, the national average interest rate on a savings account was 0.17%. At that same time, some online savings accounts had interest rates that were around 2%.

Frequently Asked Questions (FAQs)

How much interest does a savings account earn?

Interest rates on savings accounts vary by bank, credit union, and financial institution. Online banks tend to offer the highest APYs. Interest rates will also fluctuate based on the interest rates set by the Federal Reserve. However, traditional savings accounts could pay as little as 0.1% APY while high-yield savings accounts could offer as much as 2% or more, depending on the interest rate environment and financial institution.

How much money should I keep in a savings account?

Your savings goals will determine how much you should keep in a savings account. If you’re trying to build an emergency fund, for example, at least three to six months’ worth of expenses is a good rule of thumb.

When should I put money in a savings account?

The sooner you start saving money in a savings account, the better. This is particularly true if you have a medium-term or long-term savings goal that will take months or years to achieve. Plus, the sooner you save the money there, the sooner it can start earning interest.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Investor.gov. “Certificates of Deposit (CDs).”

  2. FDIC. “National Rates and Rate Caps.”

  3. Navy Federal Credit Union. “Certificate Ladder Calculator.”

  4. Consumer Financial Protection Bureau. “What Is a Money Market Account?

  5. Paramount Bank. “Interest Checking.”

  6. TreasuryDirect. “Treasury Bonds.”

  7. TreasuryDirect. “Announcements, Data & Results.” Select “Bonds” in table.

  8. TreasuryDirect. “Tax Forms and Tax Withholding.”

  9. TreasuryDirect. “Treasury Inflation Protected Securities (TIPS).”

  10. Washington State Department of Financial Institutions. “Saving for Emergencies.”

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