Easy ways to earn 5% interest (or more) on your savings

Over the last couple of years, persistent inflation has been chipping away at the value of the dollar and causing the cost of consumer goods to increase. And, while inflation appeared to be cooling over the last few months, the most recent CPI report showed that inflation actually ticked back up by 3.2% in July — an unexpected and unwelcome surprise.

Between the higher costs on groceries, gas and other necessary goods, many people are now strapped for cash. If you're one of them, it may help to find easy ways to earn some extra money. One way to do that is to earn a substantial return on your savings.

But you can't do that with a regular savings account. The interest rates on these accounts are failing to keep pace with inflation. However, there are a few smart strategies you can employ to achieve a 5% interest rate or even higher on your savings, buying you a little leeway with your finances. 

Find out how taking advantage of today's high savings rates could benefit you.

Easy ways to earn 5% interest (or more) on your savings

There are a few ways to earn at least 5% returns on the money in your savings right now. Here are some strategies that could help you reach that goal:

Move your money to a high-yield savings account

One of the simplest ways to earn 5% or more on your money is to transition from a standard savings account to a high-yield savings account. These accounts are offered by online banks, credit unions and some traditional banks, and they typically offer interest rates that are significantly higher than those of brick-and-mortar banks.

Right now, the average regular savings account offers a paltry 0.43% in interest on your money, but it's possible to find high-yield savings accounts that offer interest rates of 4.5% or even more currently. While these rates are variable, meaning they can fluctuate due to market conditions, the current rates still surpass the national average by a considerable margin. 

That said, some high-yield savings accounts come with certain restrictions, such as limited access to physical branches or higher minimum deposit requirements. However, the trade-off can be well worth it for the interest you can earn on your savings — and there are plenty of no-fee options to choose from, too.

Learn more about the savings rates you may qualify for here now.

Put your money in a CD

Certificates of deposit (CDs) are another simple way to earn more on your money now. With CDs, you agree to keep your money deposited for a fixed period, ranging from a few months to several years. In return, you'll receive a higher interest rate compared to regular savings accounts. 

The key advantage of CDs is that unlike high-yield savings accounts, which have variable rates, CDs offer fixed rates instead. Because you're earning a guaranteed interest rate during the agreed-upon term, these accounts effectively shield your money from rate fluctuations in the market. 

And, at the moment, it's not uncommon to find CDs with interest rates of 5% or higher, and you don't have to lock your money away for years to get it. Many short-term CDs currently offer very high rates — so if you're concerned about the time commitment, you may be able to find a short-term CD with a rate that fits your financial strategy. 

And, while CDs are offered by a range of financial institutions, online banks tend to offer the highest rates due to having low overhead. So, those financial institutions are a great place to start your search. 

However, it's important to be mindful of the commitment you're making with your CD term. If you withdraw your funds from a CD before the term ends, it will likely result in penalties.

Consider a money market account

Money market accounts are another viable option to explore if you're looking to earn higher interest on your savings. These accounts combine the characteristics of savings and checking accounts, providing you with liquidity and competitive interest rates. Money market accounts often come with check-writing privileges and debit cards, making them convenient for accessing your funds while still earning a decent return.

Interest rates for money market accounts can vary, but some financial institutions offer rates around the 5% mark right now. While this might not be the norm, it's worth researching and comparing rates across different banks to identify the best option for your financial goals.

The bottom line

Earning 5% interest or more on your savings is an achievable goal with the right financial tools and strategies. Moving your money to a high-yield savings account, investing in CDs and considering money market accounts are all methods that can help you boost your savings' growth potential. Remember, though, that interest rates can change, so it's crucial to make your move at the right time, stay informed about market trends and be prepared to adapt your strategy accordingly.