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

A woman empties a piggy bank
Photo by Robert Kneschke / Shutterstock.com

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 MoneyTalksNews.com, 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 MoneyTalksNews.com. 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.

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

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.

Got any words of wisdom you can offer on this week’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

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

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

6 Investing Tools That Help You Diversify
6 Investing Tools That Help You Diversify

Here’s how you can lend to startup businesses, fund social causes or get in on investments once available only to the very rich.

5 Ways Retirees Can Lower Their Income Taxes
5 Ways Retirees Can Lower Their Income Taxes

Here’s how to keep Uncle Sam’s mitts away from your nest egg.

Avoiding These 5 Foods Could Save Your Vision as You Age
Avoiding These 5 Foods Could Save Your Vision as You Age

Millions of Americans may be able to prevent an incurable cause of blindness by making a basic change.

6 Reasons Hiding Cash at Home Is a Terrible Idea
6 Reasons Hiding Cash at Home Is a Terrible Idea

Stashing cash around the house is anything but harmless.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.