As of December 2024, here is a compilation of the best interest rates on cash investments, ranging from short to long maturities. Individual investors can explore lesser-known opportunities that offer higher returns while maintaining a similar level of safety by considering FDIC-insured banks or NCUA-insured credit unions. Utilizing tools like the Ultimate Rate-Chaser Calculator can help determine the potential extra interest earnings from switching accounts. These rates are accessible nationwide and were last verified on 12/15/2024.
High-Yield Savings Accounts
One option for maximizing cash returns is through high-yield savings accounts, especially when traditional banks offer minimal interest rates. Newcomers like TIMBR at 5.05% APY and Pibank at 5.00% APY are currently leading the pack. However, established players like CIT Platinum Savings and SoFi Bank also offer competitive rates, albeit slightly lower. It's crucial to monitor these rates as they can fluctuate, with some banks employing tactics to lure customers with high initial rates that later decrease.
Short-Term Guaranteed Rates
For individuals with short-term cash holdings awaiting deployment, a viable option is to consider no-penalty certificates of deposit (CDs). These CDs provide a fixed interest rate that remains stable while allowing a one-time penalty-free withdrawal. Institutions like Marcus and Farmer's Insurance FCU offer attractive rates on no-penalty CDs, providing flexibility and accessibility to funds when needed.
Money Market Mutual Funds
When seeking higher yields on cash investments, money market mutual funds present an alternative to traditional bank accounts. Vanguard Federal Money Market Fund and Vanguard Treasury Money Market Fund are notable options, offering competitive yields while maintaining regulatory standards. These funds, though not FDIC-insured, are backed by reputable firms, providing a balance between returns and safety.
Treasury Bills and Ultra-short Treasury ETFs
Investors can explore Treasury bills and ultra-short Treasury ETFs as avenues for cash investment. Treasury bills, fully backed by the US government, offer varying maturities with tax-exempt interest, making them an attractive option for risk-averse individuals. ETFs like iShares 0-3 Month Treasury Bond ETF and SPDR Bloomberg Barclays 1-3 Month T-Bill ETF provide diversified exposure to short-term Treasury securities with competitive yields.
US Savings Bonds
US Savings Bonds, particularly Series I Savings Bonds, offer inflation-linked returns supported by the US government. These bonds require a minimum holding period and may incur penalties if redeemed within five years. With electronic I bonds having a yearly purchase limit, investors can leverage these bonds for long-term cash investments with built-in inflation protection.
Rewards Checking Accounts
Rewards checking accounts provide an opportunity to earn above-average interest rates, albeit with specific requirements such as debit card transactions and direct deposits. Institutions like OnPath Federal Credit Union, Genisys Credit Union, and La Capitol Federal Credit Union offer competitive APYs on limited deposit amounts, with additional perks like Visa reward cards for new account holders.
Certificates of Deposit (CDs) - Greater Than 1 Year
For those looking for higher returns on cash with a longer investment horizon, certificates of deposit (CDs) exceeding one year in maturity can be considered. Institutions like Credit Human, Synchrony Bank, and BMO Alto provide attractive APYs on varying CD terms, allowing investors to build a CD ladder for enhanced flexibility and returns. Brokered CDs from Vanguard and Fidelity offer FDIC insurance and easy laddering options, although early withdrawal penalties may vary.
Longer-Term Instruments
Caution is advised when considering longer-term cash investments due to increased interest rate risks associated with them. However, long-term CDs accessible through brokerage firms like Vanguard and Fidelity offer FDIC insurance and potential higher yields compared to other options. Investors must carefully evaluate their risk tolerance and investment goals before committing to long-term cash instruments.
