Where to Score the Best Interest Rates on Your Savings

You can earn up to 2% and still sleep tight. Willing to take a risk? You could snag 4%.

For savers, the days of earning tantalizing rates on a wad of cash seem like a distant dream. If you need a safe place to park your money now, the prospects aren’t pretty. Money funds are paying almost nothing. The most generous rates on bank deposit accounts barely brush 1%. Even the highest-yielding Internet checking accounts, once heralded as the go-to place for great rates on up to $25,000, are paying 2% to 3%—and that’s only if you meet certain requirements, such as using a debit card several times a month. And agreeing to lock up your money for a few months or years doesn’t help much: A five-year certificate of deposit yields, on average, 1.19%. Rates aren’t moving up anytime soon, either. In response to the still-sluggish economy, the Federal Reserve announced last summer that it would keep short-term rates near zero through mid 2013—and maybe longer.

Given the challenging environment, some financial planners are getting creative in the hunt for yield. Brent Perry, president of Piedmont Financial Advisors, in Indianapolis, has told clients with plenty of cash and a penchant for travel to look into accounts that offer frequent-flier miles instead of interest. With $50,000 parked in BankDirect’s Mileage Checking Account, for example, you could earn 60,000 American Airlines miles in a year. With that, he estimates, you could buy two round-trip domestic coach tickets worth about $500 minimum—an immediate return of 1%.

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Lisa Gerstner
Editor, Kiplinger Personal Finance magazine

Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.