3 Ways to Earn Higher Interest on Personal and Business Savings

Tired of earning a pittance on your personal or business savings? Use these tips to find a bank that will help you earn more and easily make the switch.

Laura Adams, MBA
Read time: 11-min
Episode #621
The Quick And Dirty

To earn higher interest on your savings, here are three great options.

  • Online rewards checking accounts
  • Credit unions (either online or local)
  • High-yield online savings accounts

Building savings is an essential part of a healthy financial life. Everyone should maintain an emergency fund as a safeguard against the unexpected, such as losing your job or getting a large medical bill. Additionally, you might have other savings goals, such as taking a vacation or buying a home.

But the downside of using a typical bank account for savings is that you earn a pittance in interest. Average accounts pay a fraction of a percent, making your money grow painfully slowly. While growth isn’t the purpose of an emergency fund or other short-term savings account, if you can earn more and still keep the account safe, why not?

In this post, I’ll cover three great ways to park your personal or business savings and earn more interest. Plus, you’ll learn how to switch bank accounts as seamlessly as possible when it's time to find a new one.

How to earn more interest on savings

While it’s possible to find a high-yield bank where you live, chances are you’ll need to use one that exists online. Internet-only banks have much less overhead than those with brick-and-mortar locations, so they tend to offer richer benefits.

Internet-only banks have much less overhead than those with brick-and-mortar locations, so they tend to offer richer benefits.

But if you’ve never used a banking institution without a local branch, it can seem a bit unsettling at first. You might worry that if something goes wrong, you won’t have somewhere to go for help.

In my experience, customer service at online institutions is better than at local branches. Instead of keeping “bankers” hours of nine to five, they have service representatives available by phone or chat 24/7.

Most online banks have great mobile apps that allow you to deposit paper checks remotely by snapping a picture. And you can make electronic transfers between accounts in a day or two. So, don’t be afraid to try the online banks that I’m going to cover because they can really pay off.

Here are some of the best ways to earn higher interest rates on personal and business funds.

1. Use a rewards checking account

While you might be searching for a high-interest savings account to earn more money, instead, using a rewards checking could be the ticket. These special accounts pay incredibly competitive rates and offer a variety of additional perks. The catch is that you must jump through some hoops to qualify for the rewards.

For instance, here are the monthly requirements for the free, online TAB Bank Kasasa Cash Checking Account, which pays 4% APY on balances up to $50,000:

  • At least one direct deposit, ACH transaction, or bill pay transaction.
  • At least 15 debit card purchases of $5 or more.

Those are incredibly easy requirements to meet! But even if you don’t comply in a given month, the account is still free and pays 0.05% APY. If you can sock away more than $50,000, amounts over that threshold earn 0.25% APY.

Additional benefits that come with the TAB Bank rewards checking include:

  • ATM fee refunds up to $15 per month
  • No monthly fees
  • No minimum balance
  • No minimum balance to earn rewards
  • Mobile app with remote check deposit
  • Online banking and bill pay
  • Budgeting tool
  • FDIC insurance

Don’t overlook the fact that saving money in a checking account could allow you to get the highest possible interest rate. But if you’re not a debit card user, you’ll have to get used to it. Most rewards checking accounts require a certain number of debit charges because the interchange fees earn revenue for the bank, which helps pay you the high interest rate.

One tip for using a debit card wisely is not to use it online. It’s safer to only pay with a debit card at local merchants you trust. That might include grocery stores, coffee shops, restaurants, and salons. In 6 Risky Situations When You Should Avoid Using a Debit Card, I cover everything you need to know.

One tip for using a debit card wisely is not to use it online. It’s safer to only pay with a debit card at local merchants you trust.

To make sure you meet the monthly debit card minimum, keep a sticky note on the card to record the dates you make charges or make notes on your phone. That way, you won’t miss a month of high interest.

If you’re self-employed, the free TAB Bank business checking offers a competitive 0.25% APY, plus other nice perks, including unlimited transactions. Most business checking accounts don’t provide either of these benefits without charging a monthly fee.

Their business savings account also pays 0.25% APY, or you can get 1.82% APY with their money market. There are no monthly fees, and you have easy access to your funds.

2. Don’t overlook credit unions

If you’re not familiar with credit unions, I’ll give you a primer. They can offer extremely competitive interest rates that you shouldn’t miss.

The main difference between credit unions and banks is that credit unions are non-profit financial cooperatives and banks are for-profit businesses. Credit unions are owned by their customers, known as members, and banks are owned by investors or shareholders.

Banks are in business to please their investors, which can be at odds with what’s best for customers. Credit unions exist only to serve their members, which is why they generally offer better customer service. Most earnings are put back into a credit union and ultimately returned to members in benefits such as competitive interest rates paid on deposits, lower interest rates charged on loans, and fewer fees.

Just like most banks have FDIC insurance, which covers up to $250,000 per depositor, credit unions offer the same insurance amount through the NCUA or National Credit Union Administration.

Just like most banks have FDIC insurance, which covers up to $250,000 per depositor, credit unions offer the same insurance amount through the NCUA or National Credit Union Administration. Both types of insurance are backed by the full faith and credit of the U.S. government.

But credit unions aren’t allowed to serve the general public like banks. So how do you become a credit union member? Every credit union has different requirements. Some limit membership to defined groups, such as those:

  • living in a particular county or geographic area
  • working for a specific organization, such as a military base, hospital, or school system
  • working in specific industries, such as healthcare or education 

In some cases, you can become a member by only making a small donation to an association or charitable organization. And most credit unions give automatic membership to the immediate family of existing members.

To join the Consumers Credit Union, you simply pay a one-time, non-refundable $5 fee to their sponsor, the Consumers Cooperative Association, and then maintain a minimum of $5 in your account. They offer a variety of online checking and savings options, including a free rewards checking.

Here are the monthly requirements to earn one of the highest yields nationwide, which is up to 5.09% APY on balances up to $10,000:

  • At least one direct deposit or ACH transaction totaling $500 or more
  • At least 12 debit card purchases totaling $100 or more
  • Sign up for e-documents
  • Spend at least $1,000 using a Consumers Credit Union Visa

If you only spend $500 on the Visa, you still qualify to earn a competitive 4.09% APY. And if you don’t get their Visa or you don’t make any changes to it, you qualify to earn 3.09% APY, which isn’t too bad.

If your balance goes over $10,000, you earn 0.20% APY on amounts over that threshold up to $25,000. And amounts over $25,000 earn 0.10% APY.

Additional benefits that come with the Consumers Credit union rewards checking include:

  • Unlimited ATM fee refunds
  • No monthly fees
  • No minimum balance
  • No minimum balance to earn rewards
  • Mobile app with remote check deposit
  • Online banking and bill pay
  • NCUA insurance

If your rewards checking balance exceeds $10,000, you could use the Consumers Credit Union Smart Saver account to earn a higher rate of 2% APY. You just need to make a monthly deposit to the account in the range of $50 to $1,000.

If you’re self-employed, Consumers Credit Union offers a variety of free checking and savings options at competitive rates. Many credit unions offer both personal and business banking. So, shop around for accounts that provide what your business needs, such as merchant services, credit cards, and loans.

3. Try a high-yield online savings account

If you don’t want to use a rewards checking or you don’t have much savings to deposit, you can still get competitive interest rates with high-yield online savings accounts. The minimum deposit and balance requirements vary widely across institutions, so shop around. Some require nothing, and others could require a deposit of $10,000 or more to snag a high rate.

Also, check the minimum balance required on high-yield savings accounts. Some may charge a monthly fee if you dip below a certain threshold or pay a lower rate.

A great option right now is CIT Bank’s Savings Builder account. It pays 1.8% APY if you make a monthly deposit of $100 or more. There are other options close behind this rate that don’t require a monthly deposit. For instance, both the Discover and American Express credit card companies also offer high-yield savings that pay 1.7% APY.

If you do have more to save, you can earn slightly more. For instance, Citizens Access pays 1.85% APY with a $5,000 minimum deposit, and CIBC U.S. also pays 1.85% APY with a $1,000 deposit.

Every account I’ve mentioned is FDIC-insured, free, and has an app allowing you to deposit paper checks remotely. And while you can’t deposit cash, you can make an unlimited number of deposits by check or electronic transfer.

An online savings account is an excellent place for your emergency savings and short- or medium-term savings goals.

The main downside of a savings account is that you can only make up to six withdrawals per month by check, debit card, or electronic transfer. So, it’s an excellent place for your emergency savings and short- or medium-term savings goals.

If you need more access to your cash, a money market savings account is a better option for both personal and business use. It’s like a checking and savings hybrid that allows the convenience of unlimited transactions with higher rates. However, the rates and deposit requirements vary considerably, so do your research.

How to Swith Bank Accounts

It’s important to note that banks and credit unions can change their interest rate offers at any time. The rates I’ve quoted are as of January 10, 2020. If you sign up for an account and the rate goes down, or the fees go up, it might be time to make a change.

Switching bank accounts, especially checking, does take a little effort on your part, but it’s usually worth it. Use these five steps to make switching banks as easy as possible.

Step 1: Apply for your new account

Some great places to search for the best personal and business accounts are Bankrate.com, Findabetterbank.com, and Depositaccounts.com.

Step 2: Fund your new account

Most institutions accept a variety of payment options for your initial deposit, including check or transfer. Remember to keep enough money in your old account to cover any outstanding payments that will be drafted before you can change them.

Step 3: Change any automatic transactions

Make a list of your automatic or recurring transactions—such as payroll deposits, gym memberships, insurance premiums, and monthly subscriptions—including the next date you expect them to hit your account. You could scan your last few bank statements to make sure you don’t miss anything happening on autopilot.

It’s best to switch automatic deposits first, so you know exactly when your income will begin flowing into the new account. Most banks have a direct deposit form that you can send to your employer or other income sources authorizing an update. Then you can switch any automatic payments.

But don’t assume that just because you submit an account change form that the very next direct deposit or automatic withdrawal will hit your new account. Depending on how much advance notice an employer or a merchant needs, the change may take a full accounting cycle. So, leave enough money in your old account to cover any recurring payments.

Step 4: Stop using the old account

After you switch over your automatic deposits and withdrawals, stop using your old debit card or paper checks. Remember that you might have other accounts linked to it, such as a credit card, Venmo, or PayPal account that will need to be updated.

Step 5: Close the old account

One of the biggest mistakes people make is closing their old bank account too early before all the pending transactions have cleared. Wait until you have an account statement from your new bank to verify that each of your monthly automatic transactions is linked.

Many banks require you to speak to a representative in person or on the phone to close an account. If you do have a remaining balance, they can transfer it to your new account or mail you a paper check. Once your account is officially closed, you can destroy your old debit card or paper checks.

Making the switch to a better bank can be the key to getting better service, paying fewer fees, and earning more interest on the money you already have.

About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.