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New Tool to Maximize Your Bank Savings


What strategy do you use to maximize your bank savings? If you’re a long-time reader of (DA), your strategy is probably more complex than you realize. As many of us have learned, it’s not just finding the highest rate on a savings account or CD. You have to decide on the best mix of deposit accounts to meet your savings goals, short-term cash needs, and appetite for effort.

To help the average person get started down the path of more effectively growing his or her cash, we have developed a new tool called ‘Where to Safely Grow Your Cash.’ Answer three simple questions about your savings situation, and the ‘Where to Safely Grow Your Cash’ tool will find some of the best options and lay out some of the pros and cons of each. The tool is searching our database of hundreds of thousands of rates and is utilizing proprietary formulas to generate these options based on your individual inputs, so please let us know via comments at the bottom of this post how it performs with your real-world tests!

This ’Where to Safely Grow Your Cash’ link will take you directly to the tool. You can also access this tool and other tools from our home page at DA. The list of tools and calculators are near the bottom of the home page.

Why Deposit Accounts Are Still Needed

Before you give the tool a try, it’s important to understand why you should utilize deposit accounts for your savings. Some people make claims that all of their money is in stocks, bonds and alternative investments. With this very low interest rate environment, those investments may look enticing, but deposit accounts still have a place even in the portfolio of the most aggressive investor. As DA readers know well, federally insured deposit accounts are one of the safest places for your money. You don’t have to worry about losing money. That’s an important feature if you’re a very conservative investor or if you’re saving for a short-term goal. It’s also an important feature for an emergency fund. If an emergency happens and you need money, you don’t want to be forced to sell your stocks and bonds in a down market.

Deciding on the Type of Deposit Accounts

Once you realize the need to have deposit accounts for at least some of your savings, it’s then important to understand the three basic deposit accounts that should be considered. The tool will list options that collectively include all three accounts (sometimes in combinastion). Your decision about which option to choose will depend on your priorities. Below is an overview of the three basic deposit accounts:

  1. Savings Accounts - These accounts offer the most simplicity and withdrawal flexibility. The downside is the interest rates won’t be the best. To learn about the basics of a savings account, click here.
  2. Certificates of Deposit (CD) - CDs require little effort, and they generally pay higher interest than savings accounts, but they lack withdrawal flexibility. To learn about the basics of CDs, click here.
  3. High-Yield Reward Checking Accounts - These checking accounts have the withdrawal flexibility of savings accounts with interest rates that can be higher than CDs. The downside is that they can require a lot of effort to meet the monthly requirements, which typically include debit card usage. Also, the high interest rate is capped. The portion of the balance over the cap earns a much lower interest rate. To learn about the basics of high-yield reward checking accounts, click here.

Deciding on the Right Mix of Deposit Accounts

The ‘Where to Safely Grow Your Cash’ tool will list options that include the above accounts and a mix of the above accounts. Each option has its pros and cons. The tool points out the pros and cons of each option based on the effort you’re willing to put in and the flexibility you need with regards to your money.

Snapshot of the 'Where to Safely Grow Your Cash' Tool

Where to Safely Grow Your Cash Tool

  • "Keep It Simple" Option - This option lists savings accounts with the highest rates available in your area. It’s simple since you only have to worry about opening and maintaining one savings account. It allows you to exert low effort and maintain high withdrawal flexibility on your savings, though your returns likely won’t be as high as with several of the other options.
  • "Don’t Fear Commitment" Option - This option lists just one CD with a term that matches your investment timeframe. You can get a higher interest rate than the "Keep it Simple" option without any additional effort, but the drawback is less withdrawal flexibility.
  • "Dual Account" Option - If more withdrawal flexibility is desired on a portion of your savings, the "Dual Account" option can be used. This suggests depositing a percentage of your savings into a CD (for higher returns) and a smaller percentage into a savings account (for withdrawal flexibility). Both accounts listed are at the same bank or credit union to minimize the effort required.
  • "Mix and Match" Option - With additional effort, you can obtain a higher overall interest rate by choosing a savings account that’s at a different bank or credit union than the CD. This option is called "Mix and Match."
  • "Use the Rules to Your Advantage" Option - This option takes advantage of the low early withdrawal penalties and higher interest rates available on select long-term CDs to maintain some withdrawal flexibility while still achieving higher returns. For example, instead of opening a 2-year CD and waiting two years until the 2-year CD matures, you open a 5-year CD and close the CD early after 2 years. In some cases the effective yield of that 5-year CD after the early withdrawal penalty is higher than most 2-year CDs.
  • "Build a CD Ladder" Option - If your investment timeframe exceeds five years, you’ll see this option. Since CDs with terms over five years currently offer very little interest rate advantage as compared to 5-year CDs, it makes sense to stick with 5-year CDs. A CD ladder with 5-year CDs can be useful for any long timeframe. This option helps you start this ladder by listing the best 1-, 2-, 3-, 4- and 5-year CDs.
  • "Go for a Reward" Option - This option adds a high-yield reward checking account to maximize your interest. If your balance exceeds the reward checking cap, a savings account is added for the remaining balance. Reward checking accounts require more effort than savings accounts and CDs, but they offer a way to earn more interest. Also, they offer a high degree of flexibility in terms of access to your money.
  • "Keep the Rewards Coming" - For those who are willing to do a lot of work to achieve the highest overall interest rate while maintaining full withdrawal flexibility, this option is for you. If your savings balance is large, this option will list multiple reward checking accounts. This is the way to get the most interest without sacrificing flexibility for accessing your money. However, it requires a very high effort level.

Bottom Line

If you’re a long-time DA reader, you probably already use some of the above options in your savings strategy. Many additional variations of the above options are possible. For example, you probably keep some of your savings in savings accounts and some in CDs. The percentage of each may vary based on your short-term goals and your expectations about future interest rates.

While the ‘Where to Safely Grow Your Cash’ tool can help the experienced savers, it’s intended to be most helpful for the "average Joes" who haven’t spent the time to understand the details of these strategies and whose funds are currently languishing in a megabank account earning minimum interest. We hope this tool will prove valuable for everyone who wants a quick guide to help them navigate and select from the millions of combinations of bank accounts and strategies available for safely growing their cash.

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SimonSays   |     |   Comment #1
Excellent article. Outstanding Tool.

I've prepared an excel sheet to track my deposits v/s the interest rates. I assign a score to each line based on 2 factors.

a. Am I above the average interest rate or lower

b. What's the percentage of my deposits

The flexibility, risks and effort is not accounted for so far since I have less than 10 line items. I also give a bottom line score which tells me how I'm doing overall. Currently my score is -1.63 (yes its a negative). That means, I have redistribution opportunities within my portfolio, but am just lazy. I brought it up from -7 recently. A little crude, but keeps things in perspective.

My xls does not account for the bonuses and the missed opportunities like the "NO EWP" offer in Feb.

Looking at your tool, I realized, I can do even more. For some reason, in your recent CD Rates articles, you have mentioned Synchrony Bank as the top payer after 2 years and EWP. The tool shows F&A CU on top for 2 years.
Anonymous   |     |   Comment #2
Gosh.  No barbells?
Anonymous   |     |   Comment #3
Thanks Ken!
Shorebreak   |     |   Comment #4
How about a choice of 'National' in addition to a specific state? When choosing a state many of the options for opening an account are restricted membership.
Ken Tumin
Ken Tumin   |     |   Comment #11
Thanks Shorebreak for the very good suggestion. We just implemented the "Nationwide Only" as a new option in the state list.
Anonymous   |     |   Comment #6
This is extremely useful.  Thank you very much (again)!!!!
Anonymous   |     |   Comment #7
Love all you for us and for showing how much we have to look forward to by saving instead of spending. How much quicker it is to pay cash for things we need rather than go in debt.
 Thanks Ken. 
Anonymous   |     |   Comment #8
Love how much you do for us showing how quickly we can grow our savings with your ideas and charts. It is so much better to save and purchase the things we need rather than going in debt for instant gratification.
Thanks Ken
Interested Party
Interested Party   |     |   Comment #9
Ken, you and your team have done a wonderful job with this new tool. In the future, where on the website can this be found?
Ken Tumin
Ken Tumin   |     |   Comment #13
Glad you like the new tool. Thanks for the compliment. The link to this tool and other tools can be found near the bottom of the DA home page.
SimonSays   |     |   Comment #10
Playing with this tool...Interest Maximizer

The highest return would be with the following combo in most of my situations:

Breaking 5 year CDs + Reward Checking accounts (Albeit, highest effort)

I did not see this combo show in the results. Taking this further, if the breaking of CDs option shows up in the regular CD table, would be great.
Ken Tumin
Ken Tumin   |     |   Comment #15
Thanks for suggesting that combo. We had to try to be balanced between offering a comprehensive list of options and making sure the list of options doesn't get too long. The experienced savers will probably have to mix and match further among the options to create the exact profile of effort/liquidity/return that they want for their timeframe.

And thanks for the suggestion about adding the breaking-CD option in the regular CD table. We probably won't be able to add it to the regular CD tables, but we are looking into a way to offer this in another table.
Anonymous   |     |   Comment #12
What a great addition to the site!  Thank you.
Anonymous   |     |   Comment #14
Wow...Thanks so much, Ken.   Very interesting to explore!
Anonymous   |     |   Comment #16
Ken or anybody, obviously the rewards checking gives you the best return or at least in my case it does and I know there's more involved then just putting your money in a CD and just forget about it, but since the majority of these accounts require direct deposit and I have one paycheck coming in would interest on a CD or dividends from a brokerage transferred by ACH  to these accounts qualify? Once again Ken Thanks! You went above and beyond.
gregk   |     |   Comment #17
Great if it helps those without the intuitive intelligence and financial skills to effectively act "on the fly" feel more confident about their deposit choices.  For myself I've always been dubious over people's infatuation with these sorts of techniques however, which only very imperfectly (and often incompetently) take account of all the perpetually shifting inner and outer dynamics involved.  What looks great "on paper" so often ends up delivering a confusingly unsatisfactory result.  For many of us here we appreciate the mass of regularly updated "raw data" assembled on DA, but leave it to our own informal and perhaps inscrutable "inner compass" to know quite immediately just what deals "fit" in our overall schema of objectives mixed with circumstances, without the need for much systematic analysis.
california girl
california girl   |     |   Comment #18
I used this tool, found the place nearby paying 2.35 jumbo 60 mo. and signed up today. Easy and the people there were super nice. Thank you for this.
Anonymous   |     |   Comment #19
You really need to add a "tools/calculators" section in the top menu to get to this.

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