Earning money from interest is a smart financial move, and at money-central.com, we’ll show you how to make your money work for you by exploring various low-risk options to generate income through interest-bearing accounts and investments. These strategies can help you significantly boost your savings and achieve your financial goals. Explore options such as high-yield savings, CDs, and money market accounts to maximize your returns, and get ready to improve your passive income, boost financial returns, and secure financial gains.
1. What Are High-Interest Savings Accounts and How Do They Work?
High-interest savings accounts provide a significantly higher annual percentage yield (APY) than traditional savings accounts, allowing your money to grow faster. These accounts are ideal for individuals looking to maximize their savings while maintaining easy access to their funds, and online banks often offer the most competitive rates due to their lower overhead costs.
Why Choose a High-Interest Savings Account?
Choosing a high-yield savings account means getting a much better return on your savings compared to regular accounts.
For example, the best high-yield savings accounts currently offer an APY of up to 4.50%, considerably higher than the national average of 0.59% as of May 2025. According to research from New York University’s Stern School of Business, in July 2025, high-yield savings accounts provide a safe and effective way to grow your money.
What to Look for in a High-Yield Savings Account?
When choosing a high-yield savings account, consider the following factors:
- APY (Annual Percentage Yield): Look for the highest possible APY to maximize your earnings.
- Minimum Balance Requirements: Check if there are any minimum balance requirements to earn the advertised APY.
- Monthly Fees: Ensure the account does not have monthly maintenance fees that could eat into your earnings.
- Rate Adjustments: Understand how often the bank adjusts its rates in response to Federal Reserve moves.
2. How Can Rewards Checking Accounts Boost My Earnings?
Rewards checking accounts offer cash back or higher interest rates on your debit card purchases, rewarding frequent debit card users. Some accounts pay higher interest rates, but these often come with specific requirements such as meeting a minimum number of transactions or maintaining a certain balance.
What Are the Benefits of Rewards Checking Accounts?
Rewards checking accounts provide the following:
- Cash Back: Earn a percentage of your debit card purchases back as cash.
- Higher Interest Rates: Some accounts offer elevated interest rates on limited balances.
- Incentives for Debit Card Use: Encourages responsible debit card usage by rewarding transactions.
What Are the Requirements to Earn Bonus Rates?
To earn the bonus rate on a rewards checking account, you may need to meet certain requirements:
- Sign up for electronic statements
- Make a minimum number of debit or credit card purchases per month
- Receive a minimum amount in direct deposits or ACH credits monthly
- Spend a certain amount on a credit card monthly
For example, Consumers Credit Union (CCU) offers interest rates as high as 5% APY on balances up to $10,000 for its Rewards Checking account, provided you meet the specified requirements.
3. What Are Certificates of Deposit (CDs) and How Do They Generate Interest?
Certificates of deposit (CDs) typically offer higher interest rates than traditional savings accounts, but they require you to keep your money deposited for a fixed term. Withdrawing your funds before the term expires results in an early withdrawal penalty, but CDs provide a secure way to grow your savings at a guaranteed rate.
What Are the Benefits of Investing in CDs?
Investing in CDs offers several advantages:
- Higher Interest Rates: CDs generally offer higher interest rates compared to savings accounts.
- Fixed Interest Rate: The interest rate is locked in when you open the CD, protecting you from rate drops.
- Safe Investment: CDs are a low-risk investment option, especially when offered by FDIC-insured banks.
What Should I Know About CD Terms and Penalties?
- CD Term: The period you agree to keep your money in the CD. Terms can range from a few months to several years.
- Early Withdrawal Penalty: A fee charged if you withdraw your money before the CD term ends.
- Maturity Date: The date when the CD term ends, and you can withdraw your money without penalty.
As of May 2025, the top CD rates range from 4.40% to 4.60% APY, depending on the term length.
| Term Length | APY Range |
|---|---|
| Short-term (3-6 months) | 4.40-4.50% APY |
| Mid-term (1-2 years) | 4.50-4.60% APY |
| Long-term (3-5 years) | 4.50-4.60% APY |
4. How Can I Take Advantage of Bank Bonuses?
Bank bonuses are introductory offers that banks provide to new customers who sign up for an account and meet certain requirements, which often include setting up direct deposits and making a minimum number of transactions. For people with existing savings, bank bonuses can be a simple way to increase their earnings.
What Are the Requirements to Earn a Bank Bonus?
To qualify for a bank bonus, you typically need to:
- Deposit a minimum amount into the new account
- Maintain that balance for a specific period (e.g., three months)
- Set up regular direct deposits
- Make a minimum number of transactions each statement period
How Much Can I Earn From Bank Bonuses?
Bank bonuses can significantly boost your savings. For example, earning a $300 bonus for depositing $10,000 and maintaining that balance for three months is equivalent to earning a 3% APY in a savings account for a year. Some banks offer even larger bonuses, such as $400 or $500, although these usually require higher minimum deposits.
5. What Are Money Market Accounts and How Do They Differ From Savings Accounts?
Money market accounts combine features of savings and checking accounts, offering interest rates that are sometimes higher than those of high-yield savings accounts, along with check-writing privileges and debit cards for withdrawals. These accounts are ideal for those who want higher returns while maintaining some liquidity.
What Are the Benefits of Money Market Accounts?
- Higher Interest Rates: Money market accounts often offer competitive interest rates.
- Check-Writing Privileges: Unlike most savings accounts, money market accounts allow you to write checks.
- Debit Card Access: Many money market accounts come with debit cards for easy withdrawals.
What Are the Potential Drawbacks?
- Higher Fees: Money market accounts may have higher fees compared to savings accounts.
- Minimum Balance Requirements: These accounts often require higher minimum balances to avoid fees or earn the advertised interest rate.
- Rate Variability: There’s no guarantee that a money market account will always pay a better rate than a savings account.
Currently, the top money market account rates reach up to 4.40% APY, while the national average is just 0.47%.
6. Why Should I Check With My Local Credit Union?
Credit unions are not-for-profit financial institutions owned by their members, which often translates into lower fees, better account perks, and higher interest rates. If you have a local credit union, checking their rates and offerings could lead to a better deal for your savings and financial services.
What Are the Advantages of Credit Unions?
- Lower Fees: Credit unions typically charge fewer and lower fees than traditional banks.
- Better Account Perks: Credit unions may offer better terms and features on their accounts.
- Higher Interest Rates: Credit unions often provide higher interest rates on savings accounts and CDs.
How Can I Join a Credit Union?
While some credit unions have specific membership requirements, such as living in a certain region or working in a particular industry, others are relatively easy for anyone to join. Online credit unions also allow you to perform all banking transactions online.
7. Is Buying Government Bonds a Good Way to Earn Interest?
Investing in government bonds can be a good way to earn interest if you don’t mind some restrictions on withdrawals and are comfortable with a bit of risk. When you buy a bond, you’re essentially lending money to the government or a corporation, and you receive interest payments in return.
What Are the Different Types of Bonds?
- U.S. Savings Bonds: Government bonds that offer a fixed interest rate or a rate that adjusts with inflation.
- U.S. Treasury Bonds: Bonds issued by the U.S. Department of the Treasury, considered very safe investments.
- Corporate Bonds: Bonds issued by companies, which may offer higher yields but also carry more risk.
What Are the Risks and Rewards?
- Higher Yields: Bonds typically offer higher yields than savings accounts, especially for longer terms and corporate bonds with higher default risk.
- Market Rate Fluctuations: Bond values can decrease if market interest rates increase.
- Inflation Protection: Some bonds, like Series I savings bonds, are designed to protect your investment from inflation.
Series I savings bonds, or I bonds, issued from November 2024 through April 2025 offer a composite rate of 3.11%, including a fixed rate of 1.20% plus an inflation-adjusted rate of 1.90%.
8. How Do I Choose the Right Option for Earning Interest?
Selecting the right interest-bearing option depends on your financial needs, risk tolerance, and the effort you’re willing to invest. Here are some questions to consider:
- Will I need quick access to the money?: If you’re building an emergency fund, stick with a high-yield savings account for easy withdrawals.
- How much debt do I have?: Prioritize paying down high-interest debt before investing additional funds.
- Am I able to make the required commitment?: Bank bonuses require attention to detail and multiple steps.
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9. How Can I Build a CD Ladder for Better Returns?
A CD ladder involves opening several CDs with different maturity dates, providing both high rates and frequent access to portions of your money. This strategy allows you to benefit from higher CD rates while maintaining liquidity.
How Does a CD Ladder Work?
- Choose Several CDs: Open multiple CDs with varying maturity dates (e.g., 1-year, 2-year, 3-year, 4-year, and 5-year CDs).
- Stagger Maturity Dates: As each CD matures, reinvest the funds into a new CD with the longest term.
- Maintain Liquidity: With CDs maturing at regular intervals, you have access to a portion of your money without penalty.
What Are the Benefits of a CD Ladder?
- Higher Rates: Earn higher rates compared to traditional savings accounts.
- Regular Access to Funds: Have access to portions of your money as CDs mature.
- Flexibility: Reinvest funds into new CDs or use the money as needed.
Bankrate’s CD ladder calculator can help you build a CD ladder that’s right for you.
10. What Are the Current Market Trends Affecting Interest Rates in the USA?
Staying informed about current market trends is crucial for making informed decisions about earning interest. Factors such as Federal Reserve policies, inflation rates, and economic growth can significantly impact interest rates.
What Factors Influence Interest Rates?
- Federal Reserve Policies: The Federal Reserve’s decisions on interest rates directly affect savings and lending rates.
- Inflation Rates: Higher inflation rates often lead to higher interest rates to combat rising prices.
- Economic Growth: Strong economic growth can lead to higher interest rates as demand for borrowing increases.
How Can I Stay Informed?
- Follow Financial News: Stay updated with the latest financial news from reputable sources such as The Wall Street Journal, Bloomberg, and Forbes.
- Consult Financial Advisors: Seek advice from financial professionals who can provide insights and guidance based on your specific needs.
- Use Financial Tools: Utilize online tools and calculators to analyze and compare different interest-bearing options.
| Economic Factor | Current Trend | Impact on Interest Rates |
|---|---|---|
| Federal Reserve Policy | Monitoring Inflation | Potential rate adjustments based on inflation data. |
| Inflation Rate | 2.4% as of May 2025 | High-yield accounts significantly outpacing inflation. |
| Economic Growth | Moderate Growth | Potential for stable or slightly increasing interest rates. |
Bottom Line
Earning interest in a low-risk way is possible through high-yield savings accounts, money market accounts, CDs, bonds, and bank bonuses. With rates ranging from 4 to 5 percent on many of these options—well above the current inflation rate—now is an excellent time to make sure your cash is working as hard as possible for you.
At money-central.com, we provide comprehensive, easy-to-understand resources and tools to help you manage your finances effectively. Explore our articles, use our financial calculators, and connect with our experts to make informed decisions and achieve your financial goals. Address: 44 West Fourth Street, New York, NY 10012, United States. Phone: +1 (212) 998-0000. Website: money-central.com.
FAQ: Earning Money From Interest
1. What is APY, and why is it important?
APY, or Annual Percentage Yield, is the actual rate of return you’ll earn on an interest-bearing account, taking into account the effect of compounding. It’s important because it gives you a clear picture of how much your money will grow over a year.
2. Are high-yield savings accounts FDIC insured?
Yes, most high-yield savings accounts offered by banks are FDIC (Federal Deposit Insurance Corporation) insured, meaning your deposits are protected up to $250,000 per depositor, per insured bank.
3. What is the difference between a money market account and a money market fund?
A money market account is a type of savings account offered by banks and credit unions, while a money market fund is a type of mutual fund that invests in short-term debt securities. Money market accounts are FDIC insured, while money market funds are not.
4. How often do interest rates change on savings accounts?
Interest rates on savings accounts can change at any time, depending on market conditions and the bank’s policies. Online banks tend to adjust their rates more frequently to stay competitive.
5. Can I lose money in a CD?
No, you cannot lose money in a CD as long as you hold it until maturity. However, if you withdraw your money before the CD term ends, you will incur an early withdrawal penalty, which can reduce your earnings.
6. What are the tax implications of earning interest?
Interest earned on savings accounts, CDs, and bonds is generally taxable as ordinary income. You’ll receive a 1099-INT form from your bank or financial institution, detailing the amount of interest you earned during the year.
7. Is it better to pay off debt or invest in interest-bearing accounts?
It depends on the interest rates involved. If you have high-interest debt (e.g., credit card debt), it’s generally better to pay it off before investing in low-risk, interest-bearing accounts. However, if your debt has a low-interest rate, it may be more beneficial to invest and earn a higher return.
8. What are the best online banks for high-yield savings accounts?
Some of the best online banks for high-yield savings accounts include Ally Bank, Marcus by Goldman Sachs, and Discover Bank. These banks typically offer competitive rates and low or no fees.
9. How do I open a high-yield savings account?
Opening a high-yield savings account is usually a simple process. You can apply online through the bank’s website, providing your personal information and funding the account with an initial deposit.
10. What is a robo-advisor, and how can it help me earn interest?
A robo-advisor is an online investment platform that uses algorithms to manage your investments. Some robo-advisors offer high-yield cash management accounts that pay interest on your uninvested cash, providing a convenient way to earn interest while also having access to investment options.
