Top 3 Places to Put Your Money Instead of a 0.01% APY Bank Account

After years of near-zero interest rates on bank savings accounts, Americans are getting more savvy with their cash. Instead of leaving money in an account that pays almost interest, more people are moving money to certificates of deposit (CDs) -- recent reporting from Bloomberg shows that the amount of money held in U.S. commercial bank "large CDs" (CDs of $100,000 or more) increased by $615 billion during 2023, reaching a total of $2.26 trillion.

According to FDIC data, the national average savings account is paying only 0.46% interest as of April 15, 2024. And some major banks are still offering savings accounts that only pay 0.01% APY. This is not good enough! You don't have to settle for zero interest anymore, especially since the Federal Reserve has thus far left interest rates at 5%. You have better choices for where to put your savings -- and actually earn yield. And CDs aren't the only game in town.

Let's look at a few places where you could put your money instead of a no-yield (or low-yield) bank account.

1. The best savings accounts (up to 5.36% APY)

You don't have to settle for a bank savings account that pays 1%, 0.46%, or (even worse!) 0.01% APY. The best savings accounts are offering up to 5.36% APY (as of May 3, 2024). For example, if you have $10,000 in a savings account, after one year you'd earn $500 of interest -- and your money (up to $250,000) is FDIC-insured, and you can withdraw your cash at any time.

Some people might believe that opening a CD is the best or "only" way to earn higher yield on your savings. This isn't true. I'm not a big fan of CDs because they force you to lock up your cash for a certain amount of time, and they charge early withdrawal penalties if you need your money sooner than expected. Some of the best savings accounts give you the same yield (or better) than the best CDs, and you have more flexibility for how to access and use your money.

2. The best money market accounts (up to 5.30% APY)

According to Bloomberg, America's savers also moved $1 trillion of cash into money market accounts during 2023. The best money market accounts are paying up to 5.30% APY (as of May 3, 2024).

Opening a money market account can be a great move for your savings. These accounts function in most of the same ways as a high-yield savings account -- you can get your cash out at any time, and your money is FDIC-insured. But money market accounts give you a higher yield than a typical bank account because your cash is invested in low-risk, short-term "money market" securities like government bonds and corporate paper.

Some money market accounts also offer check-writing capabilities or debit card access. This can give you more flexibility for how to use your money. But don't try to replace your everyday checking account with a money market account; you likely won't be able to pay bills as efficiently. That's because money market accounts (like savings accounts) typically have limits on the number of withdrawals you can make per month.

3. The best CDs (up to 5.15% APY)

As of May 3, 2024, some of the best CD rates are offering APYs of up to 5.15%. The exact APY you can get with a CD is based on the bank or credit union's latest offers, the term of time that you commit your money, and sometimes the amount of cash that you put in.

For example, jumbo CDs (of $100,000 or more) can sometimes earn a higher APY than smaller amounts of deposits. Longer CD terms (like three or five years) might also help you lock in a higher APY if you can commit your cash for that long. Banks and credit unions also sometimes have special offers on CDs for a limited time only, where you can lock in a higher APY than is typically available with those institutions.

Unlike savings accounts and money market accounts, CD rates are fixed -- you promise to give the bank your deposits for a certain timeframe, and the bank promises to give you a guaranteed rate of yield. In case the Federal Reserve cuts interest rates in 2024, right now could be a good time to lock in a high APY on a longer-term CD. But no one knows if or when the Fed will actually cut interest rates -- so if you want to keep your options open, a savings account or money market account could be a better choice.

Bottom line

Stop letting your money languish in a near-zero-interest bank account. Instead of making money for your bank, let your money make money for you. The best savings accounts, money market accounts, and CDs can give you higher yield on your cash with the safety of FDIC insurance.