Don't Hide Cash at Home. Here Are 3 Places to Put It Instead
KEY POINTS
- Americans stash an average of $544 in valuables at home, but inflation slowly eats away at cash's value.
- High-yield savings accounts, short-term CDs, and money market funds are better places to store money.
- These accounts can earn 4.00% or higher APY, offer safety, and still give you access when you need it.
If you've got a stack of cash tucked behind your dresser or in a cereal box labeled "emergency fund," you're not alone.
According to a recent Piere survey, the average American has $544 in valuables hidden at home.
But here's the problem with hiding cash at home: Inflation doesn't care where you hide money. Every year your hidden dollars lose purchasing power -- without you even noticing.
Here are three better homes for your short-term cash.
1. Put it in a high-yield savings account
This one's first for a reason.
High-yield savings accounts (HYSAs) are easy to open, federally insured, and earn 4.00% APY or more at many online banks right now.
That's miles better than the 0% your cash earns sitting in a sock drawer or under the mattress.
To put this in dollars, let's say you have a secret $2,000 cash stash at home right now. If you kept it in an online savings account with a 4.00% APY instead (it can still be secret!) you'd earn about $7 per month in interest.
Think of an online HYSA like a digital sock drawer -- except this one grows more dollars every month and year.
Got a few thousand saved up? Open a Barclays Tiered Savings account. Earn 3.90% APY with no monthly fees and no minimum balance!
2. Short-term certificates of deposit (CD)
If you like the idea of your cash quietly earning a little extra on the side, a short-term CD could be a smart move.
Many banks are offering 3- to 12-month CDs with rates around 4.00% APY. It's a simple way to guarantee a return on your cash without taking any risk, as long as you're cool with leaving it untouched until the term ends.
3. Try a money market account
A money market account is kind of a blend between a savings and checking account. You get good interest rates (around 3% to 4% right now), but still have easy access to your money.
Some money market accounts even come with check-writing privileges or a debit card. It's a solid option to store and grow cash without locking it away.
Stop hiding cash at home
I know, I know, having a secret stack of cash in a place that only you know feels cool. But, that $500 hidden in a shoebox could be earning you $20 to $25 per year, completely passively, with no extra risk.
Small money moves like this add up. You can still keep your money a secret -- just store it digitally, where it grows more.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.