Alternatives to savings accounts: where is the safest place to keep my money?

With the right savings account, you can still earn high returns when the market is down

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Saving money is an essential part of financial planning. Whether your goal is to create an emergency fund, save up a down payment on a home or build a nest egg for a yet-unknown purchase, savings accounts and their alternatives allow you to store your money safely.

When you invest in the stock market, you risk losing some or all of your money because your returns are tied to the performance of the market and individual stocks in your portfolio. With a savings account or alternative, you usually earn a fixed rate of return on your savings in the form of interest payments from the bank. Plus, if your money is deposited with a bank insured by the Federal Deposit Insurance Corporation (FDIC), your savings are backed by a government guarantee.

Interest rates on traditional savings accounts may be as low as 0.33%. If you want to earn a higher rate of return, many alternatives are just as safe and may pay 10 to 20 times higher returns. The one that’s right for you depends on your needs.

Key insights

  • Savings accounts and their alternatives are a safe way to store your money so you can achieve your financial goals, like building an emergency fund or saving to buy a home.
  • You may be able to earn a return 10 to 20 times higher than a traditional savings account by choosing a safe alternative, like a CD, money market account or U.S. Treasury security.
  • The safest savings alternatives are backed by the FDIC or the full faith and credit of the U.S.

Certificate of deposit (CD)

A certificate of deposit is a bank account with a fixed interest rate and term, such as one month or a year. In exchange for agreeing to keep your funds with the bank for that period, you usually earn a higher interest rate than with other savings accounts. This rate is typically lower with shorter-term CDs and higher with longer-term CDs. 

Since CDs carry a fixed term, you usually face an early withdrawal penalty if you access your funds before the term ends. This fee varies depending on how much of the term remains but could range from as little as $25 to as much as 12 months’ interest.

Andrew Haehn, a commercial portfolio manager and senior credit analyst with Pinnacle Bank, said that CDs “are a great tool for individuals who have money that they know won’t need to be accessed for a set amount of time that wish to earn a higher rate of earnings compared to other traditional bank or credit union products, like a savings or checking account.”

If you want to access your funds on demand, such as in an emergency, a savings account is a better option. Also, you may be required to make a relatively large minimum deposit to open a CD, such as $500 to $2,500. Many savings accounts don’t require any opening amount.


  • CD rates are fixed, so your interest earnings are predictable.
  • You’ll usually earn a higher APY (annual percentage yield) on a CD than on a traditional savings account.
  • There is a wide range of available terms (typically from one month to five years).


  • Your funds are locked up for a fixed term, and an early withdrawal penalty may apply.
  • You may need to meet a minimum deposit requirement.
  • Your CD’s rate might be less than market rates during high inflation.
How to open a certificate of deposit

You can open a certificate of deposit with almost any bank. Before doing so, consider the APY you’ll earn, any minimum deposit requirements, the available terms and how much you might need to pay in early withdrawal penalties.

Once you’ve selected a bank and certificate of deposit, you’ll apply for a bank account online or in person and provide personal information like your name, Social Security number and address. You’ll then select the CD terms you want.

After your new CD is opened, you’ll deposit funds into the account. Most banks allow you to transfer funds electronically or via check or cash.

Money market account

A money market account operates similarly to a savings account in that you earn a variable interest rate on the funds you deposit. However, money market accounts allow you to access your funds in more ways. For example, many money market accounts include check-writing abilities, and you might be able to use a debit card to access your funds. 

If you need to access your savings regularly, a money market account can earn a higher interest rate than a traditional savings account. However, like savings accounts, some banks may restrict the monthly transactions you can conduct (e.g., six withdrawals).


  • A money market account offers a higher interest rate than traditional savings accounts.
  • Many money market accounts include check-writing abilities and debit cards.
  • Money market accounts are just as safe as other bank deposit accounts.


  • The number of transactions you can conduct each month might be limited.
  • Your rate might be lower than other savings account alternatives, such as CDs.
  • Interest earnings are unpredictable since the interest rate varies with the market.
How to open a money market account

Most banks offer money market accounts. Opening a money market account is similar to opening any bank account . You’ll start by reviewing the rates, minimum deposit requirements and fee structures at various banks and choosing the right one.

Next, you’ll apply for your account online or in person. The bank will need personal information to identify you, including your name, Social Security number and address. As soon as your account is open, you can transfer funds into it.

You can also order checks and a debit card to access the funds in your money market account. Your banker should be able to help you get these when you set up the account. You can also usually order them online.

Cash management account

A cash management account is usually managed by a nonbank entity, such as a brokerage firm. Cash management accounts earn interest at a variable rate often comparable to similar products, like money market and high-yield savings accounts. They also allow you to withdraw your funds on demand without penalty. You may be able to write checks and access your funds with a debit card, as with a money market account.

What’s nice about a cash management account is it makes it easy to transfer funds directly into your investment accounts (like an IRA). Depending on how your account is structured, it may or may not be covered by deposit insurance, such as FDIC insurance, or up to $1 million in deposits might be protected via bank partnerships.

Some cash management accounts may require you to maintain a high minimum balance (e.g., $25,000), while others have no deposit minimums.

Cash management accounts can be a good option if you want to easily transfer funds to other investments, like retirement accounts. If you’re worried about deposit minimums, a traditional bank account like a high-yield savings or money market account may be a better option for you.


  • A cash management account allows you to transfer funds to other investments easily.
  • It may offer check-writing abilities and debit cards for easy access to funds.
  • Deposit insurance can sometimes be as high as $1 million.


  • You may be required to maintain a high minimum balance.
  • Cash management accounts aren’t as easily as accessible as other savings accounts, since they’re often offered by nonbank entities (e.g., brokerage firms) versus banks.
  • FDIC insurance doesn’t always apply to this type of account.
How to open a a cash management account

Unlike most other savings account alternatives, you’ll usually open a cash management account with your brokerage firm. Before choosing an account, review details like minimum deposit requirements, fees and the rate you’ll earn on your funds.

To open a cash management account, your brokerage firm will need personal information to identify you, including your name, Social Security number and address. Once your account is open, you can transfer funds into it.

Order checks and debit cards immediately if you want to access the funds in your account easily. Your account manager may be able to help you get these when your account is set up. You can start using them as soon as they arrive in the mail.

High-yield checking account

A high-yield checking account is like a traditional checking account, except it earns a much higher interest rate. Depending on the bank and the account requirements, you might earn an interest rate anywhere from 1% to 3% or higher on a high-yield checking account.

Many high-yield checking accounts offering the highest rates require you to maintain a substantial balance to keep the account open or avoid fees. This minimum can be as high as $10,000 to $25,000.

A high-yield checking account can be a good alternative to a traditional savings account if you have a significant amount of money to deposit and need to access it as much as you want. Unlike money market accounts, high-yield checking accounts don’t have transaction limits. You can access your funds as often as needed without worrying about potential fees or penalties.

However, not all banks offer this type of account, so it’s not as readily available as other savings account alternatives.


  • You can access your funds as frequently as you want.
  • You can write checks and use a debit card to access your funds.
  • Interest rates are significantly higher than with traditional savings or checking accounts.


  • You may need to maintain a substantial balance to avoid fees or keep the account open.
  • You might earn a higher interest rate on a money market account.
  • Not all banks offer high-yield checking accounts.
How to open a high-yield checking account

To open a high-yield checking account, start by researching banks and specific accounts. Consider factors such as minimum deposit requirements, fees, the rate you’ll earn on your deposits and how you can access your funds.

After choosing a high-yield checking account, you’ll apply for the account with the bank online or in person by providing personal information (e.g., name, Social Security number, address). Once your account is approved, you can transfer funds into it and start using it.

If you want to write checks and use a debit card to access the funds in your high-yield checking account, you’ll need to order these and wait for them to arrive in the mail. You can usually order them online or ask your banker to help you when you set up the account.


Treasury marketable securities (“Treasurys”) are a low-risk investment, since they’re backed by the full faith and credit of the U.S. government. Similar to a CD, you earn a fixed rate on a Treasury for a specific term.

There are three common types of Treasurys:

  • Treasury bills (also known as T-bills), which have short-term maturities of 52 weeks or less
  • Treasury notes, which have medium-term maturities of two to 10 years
  • Treasury bonds, which have long-term maturities of 20 or 30 years

While you can sell your Treasurys before the term matures, you’ll need to work with a bank, broker or dealer who will sell it on your behalf. This means accessing your funds isn’t as easy as with other savings account alternatives.

If you want to access your funds on demand, earn a relatively high rate of return and keep your funds in a safe savings account, a high-yield savings account is a better option than a Treasury marketable security.


  • Treasurys are backed by the full faith and credit of the U.S. government.
  • A wide range of terms is available, from as short as four weeks to as long as 30 years.
  • Since the returns you earn are fixed, they can provide a stable income stream.


  • Your funds are locked up for a set period.
  • In a rising-rate environment, you might be locked into a below-market rate.
  • You’ll need to work with a bank, dealer or broker to sell your Treasurys before maturity.
How to buy Treasurys

You can buy Treasurys noncompetitively on your own, meaning you’re not bidding on the rate and will instead accept any rate offered to you. Alternatively, a bank, dealer or brokerage firm can buy Treasurys on your behalf. You must use a bank, broker or dealer if you want to purchase Treasurys competitively.

To buy Treasurys using a third party like a bank, dealer or brokerage firm, you’ll need to meet with an investment advisor and establish an account. You’ll typically need to provide personal information so the advisor can identify you and understand your risk profile.

Once you’ve set up your account, you’ll give your investment advisor purchase instructions, such as how much you want to buy and the rates and terms you’re willing to accept. They will then execute the order on your behalf. This is similar to the process of buying stock .

If you want to buy Treasurys noncompetitively on your own, you’ll need to register online for a TreasuryDirect account. Once your account is established, you’ll be able to bid on the security and amount you want and agree to accept whatever noncompetitive rate you receive in the auction. You must bid at least $100 and in increments of $100, up to $10 million in total.


Is it safe to store your money somewhere other than a savings account?

Deposit accounts with an FDIC-insured bank or National Credit Union Administration (NCUA)-insured credit union are as safe as a savings account. These include certificates of deposit, share certificates, checking accounts and money market accounts. With FDIC and NCUA insurance, the government guarantees up to $250,000 of your deposits.

How much interest can you earn with a savings account?

With a traditional savings account, your interest rate may be as low as 0.33%. However, some banks offer high-yield savings accounts with rates 10 to 15 times higher. In exchange, some banks may require you to make a larger minimum deposit (e.g., $500) when opening a high-yield checking account.

What are the advantages of using a savings account?

Savings accounts are a safe way to store your money, particularly if your account is with an FDIC-insured bank, where up to $250,000 of your deposits are government-guaranteed. Also, savings accounts earn interest, so the funds you place on deposit will grow. And unlike some savings account alternatives, you can easily access your funds if you need them.

How much money should I have in my savings?

You should generally have enough money in your savings to cover at least three to six months of expenses in case of an emergency. However, the specific amount you should save depends on your financial goals (e.g., buying a house, funding a vacation, building a nest egg for your family).

Bottom line

It’s important to analyze your financial goals before deciding which type of account to save money in.

If you need to readily access your funds, such as for an emergency fund, consider a money market account, cash management account or high-yield checking account. These all give you easy access to your funds and pay higher interest rates than a traditional savings account.

If you won’t need to use the funds anytime soon, you’ll earn a higher return by locking up your money for a fixed term with a CD or Treasury.

Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Federal Deposit Insurance Corporation, " Bankers  Resource Center - National Rates and Rate Caps ." Accessed Feb. 2, 2023.
  2. Federal Deposit Insurance Corporation, " Deposit Insurance - Your Insured Deposits ." Accessed Feb. 2, 2023.
  3. National Credit Union Administration, “ Share Insurance Fund Overview .” Accessed Feb. 2, 2023.
  4. TreasuryDirect, " About Treasury Marketable Securities ." Accessed Feb. 2, 2023.
  5. TreasuryDirect, " Buying a Treasury Marketable Security ." Accessed Feb. 2, 2023.
  6. TreasuryDirect, " Selling a Treasury Marketable Security ." Accessed Feb. 2, 2023.
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