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Every day people are looking for ways to do more and get more out of the money they make. For a long time, putting money in the bank was the best way to do that. People open savings accounts at brick-and-mortar banks, and after a year or more, they have a fair amount of interest that’s satisfying.
Traditional banks offer savings accounts with average interest rates ranging from 2% to 6% of the savings amount. This is not a very attractive number. This has led more and more people to look to other ways to withdraw more money than deposit it in the bank.
Luckily, there are other options that can help you earn more. Let’s take a look at seven alternatives to traditional savings accounts.
Certificate of Deposit (CD)
A certificate of deposit is a type of savings that earns you a fixed interest rate over a period of time. The interest accrued on CDs is higher than the interest earned on a bank savings account. These higher interest rates act as compensation for the lack of liquidity of funds. With a CD, you cannot touch your savings until the maturity date unless you risk incurring withdrawal penalties when trying to withdraw some money from the CD.
CDs are great if you have a lump sum that you want to set aside for future expenses or emergencies. Fixed interest rates begin to increase over the years. The longer the CD tie-up period, the higher the interest rate. This is a surefire way to earn more from savings than from a savings account at a bank.
high yield checking account
The interest rates offered by banks on check-in accounts are much lower than those on savings accounts. Some financial institutions offer high-yield checking accounts with slightly higher interest rates. A high-yield checking account gives you access to your money and isn’t restricted by withdrawal penalty fees. A high yield checking account offers a higher than average APY (Annual Yield) compared to a traditional checking account. And unlike traditional savings accounts, these accounts also accept free checks and debit cards.
The trick with these accounts is that you have to meet certain requirements in order to keep them. It depends on your bank. You must maintain a minimum balance, make a certain number of transactions per month, and connect your account to your regular paycheck through direct deposit. There are no penalties if your balance falls below the minimum expected balance or if you do not meet any other requirements. Banks only offer standard low interest rates for checking accounts.
high yield money market account
One of the easiest ways to earn more interest on your balance is to open a money market account. A money market account is basically the same as a savings account, but unlike a traditional savings account, it offers higher interest rates, features for issuing checks, and uses a debit card. These MMA offer the features of a checking account while offering the main benefits of a savings account. Higher interest rates, checks and debit cards.
MMA requires you to maintain a higher minimum balance and only allows a few withdrawals per month. However, maintaining these limits will reward you with higher interest rates. there is. Money market accounts are good for achieving short-term financial goals.
cash management account
A Cash Management account is an alternative banking option offered by non-bank financial service providers. Built by a brokerage firm or a fintech startup. They are building a hybrid product that offers the functionality of traditional savings and investment accounts. They offer significantly higher interest rates than banks. Most cash management accounts can do this by flowing customer funds through other traditional bank accounts.
Cash management accounts are a great alternative as they tend to offer higher annual yields than traditional bank accounts. And since most of them operate online, you can expect a much better customer service experience online than at a brick-and-mortar bank.
online bank savings account
Online banks offer most, if not all, of the services traditional banks offer, with the added benefit of higher APY and friendly customer service.
These online banks have much higher annual yields. Interest rates fluctuate but tend to be higher than traditional bank rates. they can do this. This is because it saves the overhead incurred in maintaining physical bank branches.
peer-to-peer lending
As a potential investor looking to take a more proactive approach to saving and investing, this is an option you may want to consider. How this works is that an investor deposits a certain amount in a peer-to-peer lending platform. The platform connects you with borrowers who pay back that money in installments with interest. Interest rates are variable and determined by the parties involved.
There is a risk that the borrower will default on payments, but this risk is mitigated by not lending all the money to one individual. For example, if he chooses to invest $1,000 in a lending platform, that money will be spread across 40 different individual loans, with no more than $25-$60 per loan. Therefore, even if one of these borrowers defaults, you are likely to get a good return on your investment.
You should choose a good lending platform that offers good security and safety for your funds. Peer-to-peer lending platforms like Mintos, EstateGuru and Reinvest24 are some of the best lending options you can find on the market.
Other alternative investment platforms
There are many investment platforms available online that allow you to invest your money and get much higher returns from your savings. These platforms operate primarily through websites or mobile applications. When you register online, you will be given options to choose from. It depends on your investment assets, investment motivation and risk appetite.
Rather than putting all your eggs in one basket, you have the option to diversify your investment portfolio.
While there are countless options when looking for an investment platform to use, there are a few things you should consider before choosing one.
- Customer Service – A platform that has to wait hours or days to get an answer to a complaint is not the right platform. Check customer reviews online and on social media to understand common complaints and reactions.
- Ease of use – Most of these investment platforms operate through websites and apps, so if you are a beginner, you should choose a platform that is easy to use and understand. Tracking your investments and knowing exactly how your money is performing is not difficult. The investment platform you choose should not be complicated or difficult to operate.
- Withdrawals – Available liquidity is a very important factor to consider when choosing an investment platform instead of a savings account. Quanloop, for example, offers his 24-hour withdrawal period, which is very fluid compared to most existing services. Bondora Go&Grow is also very liquid and withdrawals can take up to 3 days.
Quanloop and Bondora are among the best options to consider when looking for European alternative investment platforms.
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