Best Places to Stash Your Cash

The number of people saving money has been increasing over the last 5 years, with the Federal Reserve reporting that the number of families saving money from their earnings has increased from 55% in 2016 to 59% in 2019. Are you new to saving? Whether you have an extra hundred dollars or thousands to store safely, it can be hard to know the best place to stash that cash.

Ultimately, where you put your savings depends on a few things, like how easily you need to access it and how much you hope to earn. Fortunately, you have options for how you’d like to start saving and possible returns; some options will offer more security than others, so check out this list of the different ways to save money. Then, see what works best for your needs.

5 ways to save your money

You don't have to put all of your savings in one spot. Feel free to mix up a few of the below suggestions on where to save your money to help you meet your financial goals.

1. Traditional savings account

Savings accounts are offered by banks and credit unions, both physical and online. Money put into traditional savings is insured by the Federal Deposit Insurance Company (FDIC) so that if something happens to the bank, your money may be covered. Check the terms of your specific savings account to find out what the insured limits are.

Benefits of traditional savings accounts can include:

•          Easily move your money

•          Simple to open

•          Usually low or no minimum amount is needed to open or maintain

Disadvantages may include:

•          May have a limit to the number of transactions you can make a month

•          May not offer check or ATM access

•          Could have lower interest rates than other savings options

Pro tip: Research your options for savings accounts online and find which rate works best for you.

2. Certificate of deposit

Another savings option is a certificate of deposit (CD). Some banks and credit unions offer them, although you might have to invest more than what's needed to open a savings account. Once invested, you may not be able take the money out until the agreed-upon time or the CD has matured.

Benefits of CDs can include:

•          Higher interest rate than other savings accounts

•          Ability to stagger CDs to get better rates

Disadvantages may include:

•          Withdrawing early may cause you to lose interest or pay fees

•          Some banks only offer high-value CDs of $1,000 or more

3. High-yield savings account

Like a traditional savings account, high-yield accounts can be simple to open and they usually provide higher rates as an incentive to keep your money in the account.

Benefits of high-yield savings accounts can include:

•          Higher rates than traditional accounts

•          Many are FDIC insured

•          Easy way to save over time

Disadvantages may include:

•          Limited access to funds – some high-yield savings accounts can take a few days to transfer funds

If you have a large chunk of cash that you don't need to use for some time, a high-interest savings account could provide larger returns. A good option to try to get started is Netspend's high-yield optional savings account, where you can earn up to 5.00% on your first $1,000 saved.[1]

4. Money market account

If you're interested in investing in the market but aren't looking for anything too risky, a money market account may be a good option. This mutual fund only puts your money into securities that are considered low-risk.

Benefits of money market accounts can include:

•          Wide availability online and through your bank

•          Many can be lower risk than other stocks and bond options

Disadvantages may include:

•          There is some risk

•          May take extensive research to find the right brokerage or firm

If you've been eager to try stocks, money market accounts may be a way to get into investing slowly.

5. Treasury bills and notes

Those looking for a more secure way to invest could find treasury bills an attractive option. You buy them at a discount, wait until they mature to their full value, and then benefit from the mature amount. (Buying a $100 bill for $97, for example.) T-bills or "bills" are another option where you buy at a discount and get interest accruements every six months.

Benefits of treasury bills and notes can include:

•          Minimum purchase of just $100

•          Earnings aren't subject to state or local taxes, but they are subject to federal taxes

Disadvantages may include:

•          Takes many years to reach full maturity

•          Can't be accessed easily once purchased

•          Low interest-earning rate

Bottom line on saving money

Anyone wondering, "Where should I save my money?" should evaluate their needs and go from there. Ask yourself these questions:

•          How much can I afford to save?

•          Will I need to have access my savings quickly?

•          How much risk am I comfortable with taking?

•          Am I more interested in earning higher interest or quicker returns?

•          Do I want to bank online or go with an in-person bank or credit union?

Your answers can help as you explore your options. Remember, you aren't stuck with just one choice, and many savers use a handful of these savings tools to get a mix of benefits.