Which savings account will earn you the most money?

Traditional savings accounts pay very little in interest, so it’s wise to explore all your options

Savings products like Tellus pay up to 22x the national average

Other higher-yielding options include certificates of deposit, money market accounts, and high-yield savings accounts

Saving money for the future is vital. And ideally, you want to put your money to work for you so it can earn you more money while you sleep! You can do this by investing or using a savings account that pays interest.

But which savings account will earn you the most money? It all depends on the type of savings account, the bank or company offering it, and other factors like the risk level.

This guide will compare some top options to help you learn how to get the best yield on your savings.

Which savings account will earn you the most money?

Most savings accounts pay interest, but rates vary from account to account. Standard savings accounts typically offer very low interest rates — the average is currently just 0.21% APY. That means a $100 deposit would only earn $0.21 in interest after a full year.

To earn more interest, savers must look beyond the standard savings accounts that banks automatically offer.

Various high-yield savings options exist. These are often offered by non-bank financial companies, which offer higher yields in exchange for slightly more risk.

These accounts are typically not FDIC insured (unlike savings accounts), but they offer much higher yields. They range in risk levels from low-risk to high-risk, depending on how they function.

For example, accounts backed by cryptocurrency lending are very risky but offer high yields. Accounts backed by real estate lending are much safer and still offer much higher yields than most alternatives.

So, which savings account will earn you the most money?

Tellus: high-yield savings

Tellus is a smart savings platform that powers your money with residential real estate, and pays you 3.85-4.75% APY—that’s up to 22x more than the average savings account today.

Tellus generates its revenues as a non-bank lender and provides mortgages — loans secured by residential real estate. The loans are typically short duration (approximately 12 months) and are always over collateralized (i.e. the value of assets held as collateral is always greater than the value of the loan amount), which offers ample protection should real estate prices soften. And as a second risk mitigation layer, Tellus holds cash proportional to every dollar deposited to provide an additional liquidity buffer.

Tellus then passes the mortgage interest income on to savers, who enjoy some of the highest yields available today.

You can learn more about how Tellus works, here.

How to find the best rate on your savings

Savers have many options as to where to park their cash. Standard bank savings accounts pay next to nothing — but various other options exist with higher yields.

Finding the right rate is mostly about comparing all your options. To do this, it’s important to have a basic understanding of how interest works and how to compare.

Rates on savings products are typically measured in annual percentage yield (APY). APY is the amount of interest earned on a deposit after one year. For example, a $100 deposit earning 1% APY will earn $1 in interest after 1 year.

In most cases, interest is paid monthly — but interest rates are always listed in annual percentage yield.

APY is a standardized measurement that already takes into account the effects of compounding interest. Fortunately, this makes it quite simple to compare interest rates across multiple options.

If one account offers 1% APY and another offers 1.50% APY, the latter is clearly superior. However, it’s important to double-check other details, such as monthly fees or account minimums.

To start comparing, it’s wise to start learning about the various types of savings accounts. From there, you can decide which style is best for your needs and goals.

Next, research interest rates available for these products from various banks. You can search online to compare various options.

And remember to look beyond standard savings accounts. Higher yielding options are available if you look beyond standard banks and credit unions.

If you’re willing to take on more risk, you could consider investing in stocks or even real estate. However, remember that these strategies are riskier and less liquid — meaning it’s more difficult to access your funds when you need them.

To keep your funds liquid and reduce risks, it’s wise to stick with savings accounts and savings account alternatives — at the very least for your emergency fund and other short-term savings goals. Some top options are listed below.

Types of savings accounts

There are various types of savings accounts available. Standard bank savings accounts are the most common but pay the least interest.

Alternatives like high-yield savings accounts are attractive — they offer the same versatility as a standard account with a substantially higher yield.

Then there are more niche accounts, like student bank accounts or youth bank accounts. These function similarly to savings accounts but are more limited in who they are available to.

Finally, there are specialty and investment accounts. While these are not technically savings accounts, they are still worth considering if high yields are the goal. Here’s an overview of some of the common types of savings accounts.

Standard savings account

Standard savings accounts are available from most banks and credit unions. They often come with a checking account when you sign up — so chances are, you already have a savings account open.

These accounts are simple to use and are linked directly to your checking account. Many are free, although some banks may charge a monthly fee.

Many savings accounts have restrictions on how many withdrawals you can make in a given month. For example, many banks restrict you to 6 withdrawals per month. Additionally, savings accounts do not come with a debit card — they are designed strictly for saving while checking accounts are designed for spending.

The downside is that these accounts pay next to nothing in interest. The national average is only around 0.21% APY. This is one reason why traditional savings accounts aren’t really worth it.

Savings accounts are sufficient for small amounts of savings, but if you have any substantial amount of money set aside, it’s worthwhile to look into higher-yielding options.

High-yield savings account

High-yield savings accounts function similarly to standard savings accounts but offer significantly higher yields.

While a traditional savings account may offer just 0.21% APY, a high-yield savings account can offer 1-3% APY.

These accounts are often available from online banks. These online banks have lower operating costs and are able to pass on those savings to depositors in the form of higher yields. Other small banks may offer these accounts as a way to attract new customers and deposits.

Apart from the higher yield, there typically isn’t a major difference between these accounts and standard bank accounts.

The only real downside of a high-yield savings account is that you’ll typically have to open an account with a new bank. You can check with your existing bank first, but these accounts are much more common at online and alternative banks.

Student savings account

Student savings accounts are designed for high school students, college students, or both. They function similarly to standard savings accounts but often offer additional perks and benefits.

Student bank accounts typically have no monthly fee, which is helpful for students on a budget. And they may pay higher yields than standard accounts. Some accounts may even offer perks like bonus rewards for getting good grades.

These accounts are typically reserved exclusively for students or individuals in a certain age group. If you qualify, it’s well worth looking into the perks of a student bank account at your bank.

Money market account

Money market accounts are like a hybrid between savings and checking accounts. They combine many of the features of both account types.

Money market accounts pay interest but also have basic checking account features. They typically come with debit cards and/or checks, which you can use to make payments and purchases.

Yields are typically somewhat lower than high-yield savings accounts but substantially higher than standard savings accounts. The real benefit is simplicity, as you can use a single account for all your financial needs.

Money market accounts are available from many brokerage firms, banks, and financial institutions.

Certificate of deposit

Certificates of deposit (CDs) are financial instruments available from banks, credit unions, and online financial institutions. They offer higher yields in exchange for reduced liquidity.

With a certificate of deposit, you agree to lock up an amount of money for a given period of time. For example, you can buy a 6-month CD that will be kept on deposit for the next 6 months. During this time, you cannot withdraw the money without paying a penalty.

CDs are available in terms ranging from 3 months to 5 years or more. The longer the term, the higher the APY will be. Interest rates are typically higher than savings accounts but may be lower than high-yield accounts.

CDs can present a decent option for savers who have a clear timeline of when they will need their funds. For example, if you plan to buy a new car in 3 years, purchasing a 3-year CD could make financial sense. You’ll get a higher yield on your savings (compared to a standard savings account), but you’ll have to wait 3 years to redeem the CD.

Tellus offers a similar product called Vaults, where you can lock-in a higher APY by locking up your money for a fixed period.

For now, you can choose between four Tellus Vaults:

Investment accounts

Investment accounts include standard brokerage accounts, retirement accounts like Roth IRAs and 401(k)’s, and alternative accounts like cryptocurrency exchange accounts.

These accounts are not technically savings accounts. They are not FDIC insured and do not function in the same way as a savings account.

However, they are still worth considering, especially for long-term savings. Over long periods of time, investing will typically earn you higher returns than savings accounts will. For example, the US stock market has returned 10% per year, on average, over the last 100 years.

Plus, retirement accounts offer special tax benefits that can help you save more money. You can earn tax breaks for making contributions, and money can also grow tax-deferred until retirement.

Investing is risky, however. Over the long term, most assets will increase in value — but nobody can predict the short-term movements of the stock market. Plus, if you choose the wrong investment, you could lose some money — or even all of your money.

There are ways to reduce this risk. By diversifying your assets, you can spread your bets to various asset classes. Using stock market index funds, which buy hundreds of different stocks, is a simple way to do this.

You can also use investment accounts to purchase low-risk assets, like US treasuries or low-risk bonds.

Other accounts

Various other types of accounts can be utilized to earn a return on your savings. These function in different ways and offer various levels of risk and reward.

Health savings accounts offer tax benefits when you set money aside for future medical expenses. Funds can also be invested to earn a return. However, these accounts are only available to those with certain types of high-deductible medical insurance plans.

Cash management accounts are similar to money market accounts and are commonly offered by stock brokers. They pay interest, offer a debit card, and may also have check-writing or bill-pay services.

Cryptocurrency lending accounts are accounts where you can deposit cryptocurrency, like Bitcoin, or stablecoins like USDC. Your cryptocurrency is then used to earn a yield, usually through lending to other crypto users. This approach is risky, but the accounts tend to pay high yields.

How to earn more on your savings

Utilizing the right kind of account is a great way to boost your earnings, but it’s not the only factor to consider. Here are some strategies you can employ to boost your savings.

Separate savings by timeframe. It’s helpful to identify different “buckets” of savings and arrange these by how long it will be until you need those funds. Then, place these funds in various savings/investment products that make financial sense given the timeline. For example, you might consider:

• A basic savings account for short-term savings
• Certificates of deposit for medium-term savings
• Stocks for long-term savings

Invest long-term savings. For long-term savings, like retirement funds, it’s helpful to invest your funds. Investing in stocks or stock market index funds can grow your money more rapidly over time than something like a savings account.

Allow savings to compound. Compound interest is the concept that the interest you earn starts earning interest of its own. For example, if you deposit $1,000 for 1 year at a 3% APY, you’ll earn $30 in interest. The following year, you’ll have $1,030 deposited and will earn interest on that new higher amount — $30.90. To take advantage of compounding interest, it’s important to leave your earnings in the account instead of withdrawing your interest earnings.

Check in regularly. Interest rates change frequently, and different banks offer different rates on your savings. To ensure you’re always earning the highest rates of interest, it’s wise to shop around on a regular basis.

Automate your savings. To accumulate more funds in your accounts, it’s helpful to set up automatic transfers to save money before you spend any. You can schedule transfers from checking to savings each week or month or time transfers to initiate shortly after you receive your paycheck.

Wrapping up

The savings accounts with the highest yields will usually be alternatives to traditional accounts. These accounts are typically not FDIC insured, but they offer substantially higher yields than standard savings accounts.

For instance, Tellus offers savers 3.85% to 5.12% APY on their savings and is powered by real estate.

Ultimately, it’s all about comparing your options to see what’s best for your situation.

If you want to try Tellus, use code “BLOG5” when signing up and enjoy 5.00% APY on your money for 7 days.