Ask Stacy: Where Can I Earn More on My Savings?

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A woman empties a piggy bank
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Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is one I get a lot: “How do I earn more on my savings without taking a bunch more risk?” While it’s not easy to do, it is possible. Here’s what I’d suggest.

For more information on this topic, check out multiple bank savings rates in our Solutions Center. Then, read “This Bank Has Raised the Interest on Its Savings Account — Again” and “Ask Stacy: How Can We Earn More on Our Savings?

You can also go to the search at the top of this page, put in the word “investing” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Stacy Johnson: Hello, everyone. Are you ready for your Q&A question of the day? Here it comes. I’m Stacy Johnson, your host, and this is brought to you by, tops in personal finance news and advice since 1991.

Here’s our question. It’s from Linda. Linda says, “I have $53,400 in savings at the moment. The interest rate is at 0.05 percent. I know interest rates are low, but this is ridiculous. This money’s going to be used in two or three months, so I can’t take any risks. Suggestions?”

Do you know, Linda, before I give you your answer, that I can remember when money market rates — in other words, risk-free savings — were paying 20 percent! Of course, at the time, mortgages were also charging 13 percent, so life was very different then.

I never thought we’d see interest rates this low. My father saw interest rates like this; I never thought we would. Yet, here we are. What are you going to do?

Number one, you’re correct not to take a lot of risk, Linda. Obviously, three months isn’t very long, so you have very few options. You can’t get a bond. You can’t get a one-year CD. You’re certainly not going to invest in stocks. Why? Because any time you’re investing in anything that can fluctuate in value, you need to be able to hold it for at least five years, no less. So, if you’re going to need money in three months, you’re going to be in an insured savings account, period.

Point two: What you need to do is shop for a better rate. Most people spend more time shopping for milk than they do for their money. You’d go to a different store. Maybe you’d go to a different gas station if gas were cheaper. People will drive around to get a deal on milk or on gas, but they won’t bother looking for a better deal on their savings.

This is dumb, especially because rate shopping is so easy. You can go to any number of places on the web, including We have a page in our Solutions Center that’ll show you different banks and what they’re paying in interest. All you have to do is pick one, transfer the money and get a better rate. You’re not going to get a huge rate of return, maybe 1.5 percent, in that neighborhood. But it’s a heck of a lot better than you’re getting now. It may not amount to that much cash, since you’re only doing it for three months on 50 grand. But hey, it’s better than a sharp stick in the eye, and it’s pretty easy to do.

Third point: If you’re unwilling to do that — in other words, if you’re unwilling to shop around and maybe look at an internet bank for your savings — at least look locally for a credit union. Generally speaking, credit unions are going to have better interest rates on your savings than your local bank will. I’m sure if you look around, you could probably find a credit union close by that’s going to give you a lot better rates and convenience. Walk in, open an account. When it’s time to empty it, walk in and empty it.

Make sense? Hope that helps, Linda.

Let’s conclude with your financial thought of the day. This one comes from President Harry Truman. Here it is: “It’s a recession when your neighbor loses his job. It’s a depression when you lose your own.” Like that? Share it! I hope I’ll see you here next time.

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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Got more money questions? Browse lots more Ask Stacy answers here.

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