The Best Kinds of High Interest Savings Accounts

In the low interest rate climate of 2011, getting a decent return on your money can be challenging. In fact, many traditional savings accounts offer interest rates of 0.25 percent or less, equating to $2.50 or less in interest a year on a $1,000 deposit. High interest savings accounts can help to improve your yields.

Online Banks

Many online banks, such as ING Direct, Ally Bank, Sallie Mae, and Capital One Bank, offer online savings accounts. These accounts work similarly to a traditional bank account, but offer much higher interest rates. As of this writing in July of 2011, their rates fall in a range from 1.00 to 1.15 percent. This would yield between $10.00 and $11.50 in annual interest on a $1,000 deposit. Many of these accounts also have very low opening balance requirements, making them easy to get.

Money Market Accounts

Money market accounts, which are floating rate accounts that are based on the return that the bank receives from investing your money into conservative vehicles, can offer higher rates than a regular savings account. One place to look for a money market account is from your stock broker. Some of these funds offer higher returns than bank funds, but also carry some risk because they are not FDIC insured.

Certificates of Deposit

If you do not plan frequently withdrawals from your savings account, consider putting your money into a certificate of deposit, or CD, accounts. These accounts carry much higher interest rates than a regular savings account in exchange for your promise not to withdraw those funds during a certain period of time. Typically, the longer the time period of the CD, the higher the rate will be. For example, a one year CD may yield 1.20 percent per year while a five year CD would provide an annual yield of 2.4 percent.

New Account Bonuses

Although not a high interest rate account per se, the new account bonuses that some banks offer can do the same thing as providing you with a high interest rate. If you can find a bank that will pay you, for instance, $50.00 to open an account and you deposit $500.00, that is the equivalent of a 10 percent return, assuming that it takes you a year to earn the bonus. If you have a relatively small amount of money to save and can assiduously follow the rules of the account, your best return will come from your new account bonuses.

High interest savings accounts can help to improve your yields

by Answers.com Author, Finance writer