Tired of Earning Low Interest on Your Savings? 4 Safe Ways to Earn 2% or More on Your Money

There are plenty of safe accounts and investment options that will let you earn more on your money, so don't settle for subpar savings account rates.

When it comes to earning money on your savings, it may seem like the best bet is to put your money in a traditional savings account with a low interest rate and easy accessibility. And, in some cases, that may be true. 

For example, your emergency fund is an extremely important part of building a solid financial plan -- and you typically need to save three to six months' worth of expenses to do it. You also need easy access in case of emergencies, so it makes sense to hold it in a traditional savings account. The downside is that the average interest rates on traditional savings accounts are typically well below 0.05%, so you won't earn much interest in return.

But that's not the case for all of your savings. Once you've built your emergency fund, you may want to put your extra money to work in an account with a higher-than-average interest rate. While it can be tough to find options that offer higher rates of interest without making risky bets, it's not impossible. If you want a higher rate of return without much risk, here are four ways to earn an average of 2% or more in interest on your extra money.

1. Sock away money in a high-yield checking account

You may not think of a checking account as a vehicle to help you earn interest on your money, but it can be -- provided that you choose the right option. While a regular checking account won't cut it, there are a number of high-yield checking account options out there that offer interest rates of 2% or higher. What that means is that you can earn 2% or more on the money you have in your account. 

And that can result in big interest payments over time. Let's say you were to deposit $15,000 into a high-yield checking account with a 2% interest rate, you'd earn about $300 in interest your first year, and may earn even more if you allow your checking balance to grow. There's really no comparison between what you could earn with that rate and what you'd stand to earn with the average traditional savings account interest rate of 0.07%. With the same $15,000 balance, a traditional savings account with a 0.07% interest rate would result in earnings of about $7.50 in interest your first year. 

It's worth noting, though, there are typically requirements for high-yield checking accounts, which you'll probably need to meet in order to access a higher interest rate on your money. These requirements vary, but in many cases, you'll need to maintain a minimum balance or make a certain dollar amount or number of deposits each month. Otherwise, you probably won't get access to the highest rates offered by these accounts. 

2. Opt for a certificate of deposit with a long term

If you have money you don't need to access for a while, it may pay off to put your money in a certificate of deposit, or CD, to get a potential interest rate of 2% or higher in return. CDs work similarly to savings accounts -- you deposit your money into the CD and it earns interest as it sits. 

The big difference is that you agree to leave your money in a CD for a certain period of time. If you're willing to leave it in for a longer term, or if you can meet the deposit requirements of a high-yield CD, you may be able to earn 3% or more on the money you deposit. 

For example, if you deposited $15,000 into a CD with a five-year term and a 3% APY, you'd earn about $450 in interest the first year. But you could possibly earn even more in the years following, since CDs typically offer compound interest, so the interest is added to your principal. In turn, the interest you earned during years one through four would also earn interest.

That said, it's important you only use the money you can afford not to touch for a few years. If you withdraw the money in your CD account prior to the maturation date, you will typically have to pay an early withdrawal penalty. And that could wipe out most or all of the interest you've earned on your CD.

3. Weigh the benefits of a cash management account

Cash management accounts aren't nearly as common as CDs or high-yield checking accounts, but these unique cash management options can be a lucrative way to earn interest on your money. 

Cash management accounts are generally offered by non-bank providers, and they function like a combination of a checking and savings account -- but they aren't bank accounts at all. Your money is managed by the provider but is held in FDIC-insured accounts with partner banks. 

In return, the APYs on these types of accounts can be as high as 5% or more, depending on the provider. What that means is that if you were to deposit $15,000 into a cash management account with a 5% APY, you'd earn an annual return of about $750 on your money. That's a significant rate of return compared to other safe interest-earning options.

There are some downsides to consider with cash management accounts, though. One potential downside is that cash management accounts can have high fees attached to them, and the accounts that earn high APYs tend to have more fees than other accounts. You may also have to meet certain balance or deposit requirements as well. 

4. Take advantage of municipal bonds

Municipal bonds may not be top of mind when it comes to earning high rates of interest, but perhaps they should be. While municipal bond rates can vary significantly, it's not unusual for the APYs on these bonds to be 4% or higher. 

Let's say you invest the same $15,000 in a municipal bond with a rate of 4%. At that rate, the annual return from interest would be $600, which is a pretty decent rate of return on a relatively safe investment. And, depending on the bond, the rates can be much higher.

But there are a couple of tradeoffs when it comes to earning interest on municipal bonds. For starters, many municipal bonds will only pay out interest a couple of times during the term. If your term is 10 years, you may only receive interest payments twice during that time. You may also have to tie up your money for a longer term.

You don't have to settle for subpar interest rates on your extra money. You don't have to make risky bets on investments, either. The accounts and investments listed above are a smart way to earn an average of 2% or more in interest on your extra money, which is pretty stellar compared to what you can earn with a traditional savings account.

But be sure to do your research first. You don't want to tie up your money in a long-term investment if you're going to need access to it in the near future, and you don't want to be stuck with high fees or penalties in return for a higher rate, either. If you pick an option that's good for you, though, you can put your money to work and earn higher-than-average returns with these options.