5 Better Places Than a Checking Account for Your Savings
KEY POINTS
- Checking accounts aren't the right place for savings because they have low interest rates.
- High-yield savings accounts, CDs, and money market accounts all pay much more.
- You can also invest some of your savings through IRAs or a taxable brokerage account.
A checking account is useful for managing your money. You can use it for depositing paychecks, paying bills, and transferring money where you need it.
What you shouldn't do is leave your savings in your checking account. Because checking accounts have low rates, you're missing out on interest when you keep your savings in one. Here are better options where you can earn more back on your money.
1. A high-yield savings account
The natural place to put your savings is in a savings account. The word "savings" is right there in the name, after all. But don't pick just any savings account. Many of them, especially from brick-and-mortar banks, don't pay much. The national average for savings accounts is only 0.47%.
Instead, check out high-yield savings accounts. These offer much higher rates, with some having APYs of 5% or more right now. If you have $10,000 in savings earning that rate, you'd make $500 in one year, just for letting your money sit in the account untouched.
Our Picks for the Best High-Yield Savings Accounts of 2025
Product | APY | Min. to Earn | |
![]() American Express® High Yield Savings
Member FDIC.
APY
3.80%
Rate info
3.80% annual percentage yield as of February 15, 2025. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.80%
Rate info
3.80% annual percentage yield as of February 15, 2025. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
![]() Capital One 360 Performance Savings
Member FDIC.
APY
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
![]() Western Alliance Bank High-Yield Savings Premier
Member FDIC.
APY
4.30%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 24, 2025, and subject to change at the Bank's discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn
$500 to open, $0.01 for max APY
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
4.30%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 24, 2025, and subject to change at the Bank's discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
|
$500 to open, $0.01 for max APY
|
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
2. CDs
High-yield savings accounts are great, but their rates can go up and down. There's speculation that interest rates will fall this year, and if that happens, savings rates will also drop.
A certificate of deposit (CD) lets you lock in an interest rate for a fixed time period. The best CD rates are generally a bit higher than the best savings account rates. There are CDs available for terms ranging from one month to five years, so you have plenty of options.
If you're not sure how long you want to lock up your money for, you could try CD laddering. That's where you buy multiple CDs, each for a different length of time. For example, you could get a 6-month CD, a 1-year CD, and a 2-year CD, instead of locking up all your savings for two years. With this approach, you'd have a portion of your money become available as each CD term ends.
3. IRAs
Another smart way to use your savings is to save for retirement. If you do this through individual retirement accounts (IRAs), you can also save on taxes and invest your money. There are two popular types of IRAs available to anyone:
- Traditional IRAs: You can deduct contributions to a traditional IRA from your taxable income. If you contribute $3,000, that's $3,000 in tax deductions. When you withdraw money from a traditional IRA in retirement, your withdrawal is included in your taxable income.
- Roth IRAs: Contributions to a Roth IRA aren't tax deductible. However, you can make tax-free withdrawals in retirement from Roth IRAs.
There are annual IRA contribution limits. The limit in 2024 is $7,000, or $8,000 for those 50 and older. You can split that up however you'd like. For example, if you're under 50, you could divide your $7,000 limit into $3,500 to a traditional IRA and $3,500 to a Roth IRA.
4. A money market account
A money market account is like a combination of a checking account and a savings account. The best money market accounts have high APYs -- some currently offer over 5%. You can also write checks from this type of account and withdraw money using a debit card.
If you want easy access to your savings, a money market account could be the way to go. Keep in mind that money market accounts often have withdrawal limits, so it's still worth having a checking account to manage your day-to-day money.
5. A taxable brokerage account
Taxable brokerage accounts are another option for investing your money and building retirement savings. Unlike IRAs, you don't get any tax deductions through this type of account. It's normally recommended to invest through retirement accounts first because of the tax savings they offer.
If you have a large amount of savings or a high income, you may hit the contribution limits on your retirement accounts. In that case, you can continue investing through a taxable brokerage account. You can also withdraw from this type of account at any time. With retirement accounts, you normally need to wait until you're 59 1/2 to avoid an early withdrawal penalty.
Your checking account should have enough money in it to cover your bills. The rest is better off in other banking products that pay higher rates, or accounts where you can invest and save for retirement.
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