Every so often, I get asked:
“Where should I put my money? Which investments should I pick to get the best returns?”
Before jumping into this topic – which has a hundred different answers, all dependent on your risk tolerance, time line, and other aspects unique to each person – let’s determine where we can best put our cash.
Savings / Checking Account
Your local bank where you have a savings and/or checking account may be the obvious starting point, but anyone with a decent chunk of change would be encouraged to keep looking – as far better rates can be had.
At the time of this writing (Q1’2015), interest rates for a regular savings account are honestly pretty abysmal, with an average return of 0.10 to 0.50% at best. It’s better than zero.. but it’s still not much. Let’s review all of our options, and see what we find.
Certificate of Deposit
The next option that comes to mind (or, recommended by an officer when you visit your local branch) is a Certificate of Deposit, or CD. In short, you give a bank a sum of money, for a period of time of your choosing, in exchange for a higher-than-normal rate. This sum of money can be as little as $500, but some banks may have much higher minimums, of even $25,000 & up.
The best rate with smallest minimum deposit, according to Bankrate.com (at the time of writing) – that can be found is:
1 Year CD
APY 1.30% / Rate 1.29%
Min. Dep. $1000
My e-BAnC by BAC Florida Bank
2 Year CD
APY 1.35% / Rate 1.30%
Min. Dep. $500
(For longer time periods of 3-5 years.. consider Peer-to-Peer lending. See my Prosper.com articles to learn more)
“Wow, only 1.3%? That’s less than inflation!”
Indeed it is! I think we can do better.
Credit Union “Insert-promo-term-here” Checking Accounts
Based on my experience, the best and highest yielding accounts can always be found in Credit Unions.
If you’re in Long Island, NY, open up a Bonus Checking account with the Bethpage Federal Credit Union (BFCU), which currently gives APY 1.00% return. Granted, it’s not a great return – but unlike a CD, you can put new money in and pull out money at any time. You DO have to have direct deposit & use their Debit Card at least (10) times a month (These 10 swipes can be easily done anytime without setting foot in a store – more on that in another blogpost).
But – what if you’re outside of New York? Or, are there even better returns available?
If we’re pursuing the highest returns – here are the best options:
Inova FCU : Ovation Checking
APY 3.00%, Up to $20,000, Min. Bal of $1500
– (5) signature-based debit card transactions of $50+/ea. per month
– Direct Deposit
Lake Michigan Credit Union : MAX Checking
APY 3.00%, Up to $15,000
– (10) Debit Card transactions/month
– Direct Deposit
– Minimum of 4 logins to home banking per month
Do you know another, higher-rate, FDIC-insured option? Share it with us!
BFCU Bonus Checking:
LMCU MAX Checking:
INOVA – Ovation Checking: