4 simple strategies to maximize your interest returns in 2024

While 2023 was a year marked by high interest rates both for borrowers and savers, many experts predict that interest rates will fall in 2024. With signs that the economy and inflation have been cooling recently, the Federal Reserve is largely projected to begin cutting rates this year, which will affect returns for accounts like certificates of deposit (CDs), savings accounts and more.

However, that doesn't mean you can't still find a good return on your savings in 2024.

"As we start the new year, interest rates for savings remain very attractive. While they may not be at the highs seen during 2023, there are still some great ways to maximize the yields on liquid savings," says Holley Cary, a CFP and VP, senior financial planner at First Horizon Advisors.

Start by exploring your high-yield savings account options here and begin earning more interest.

4 simple strategies to maximize your interest returns in 2024

Some of the top simple ways to maximize your interest returns in 2024 include the following: 

Lock in a high CD rate

While CD rates are expected to come down in 2024, locking in a CD rate now means that you'll continue to get that same interest rate for the duration of the CD.

"These can be great vehicles for money that may be needed at a specific point in the future. They often offer higher interest rates than traditional savings accounts, but require you to leave your money in the account for the specified term," explains Cary.

One way to think about locking in rates is looking at what's happened in the mortgage market.

"If you bought or refinanced a home in the last decade, you probably locked in an interest rate around 3%. Giving up that interest rate to buy a home with a 7% interest rate today must sound horrible. The same principle is true today for your investment funds," explains Chris Maxey, co-founder and investment advisor at Mosaic Financial Group. "If you lock in high rates today, you will still be benefiting from those higher rates even if rates go down in the future."

Locking in high rates doesn't have to exclusively apply to CDs, but this is certainly one area where you can get a guaranteed interest return at current rates, rather than facing the risk of rates falling in 2024.

See what you could earn with a top CD account here now.

Open a high-yield savings account

Another way to earn more interest income in 2024 is to open a high-yield savings account if you haven't done so already. 

"We have encouraged our clients to clean up their lazy money. For us, lazy money is any money that isn't working well for our clients. These can be funds in a bank account, a CD, or an annuity that aren't earning a competitive interest rate. It is time to look at refinancing that lazy money and exchanging your low-yielding accounts for higher-yielding accounts," says Maxey.

Keep in mind that high-yield savings account rates fluctuate, so what you earn now might not be what you'll earn later in the year. Thus, you might want to compare financial institutions based on their rate history to get a sense of whether they're likely to continue offering competitive rates in the future.

And because savings account rates aren't locked in, you probably don't want to roll CD funds into these accounts based on current rates alone. Instead, consider your goals. If you want more liquidity, then a high-yield savings account could be good for that, whereas if you have some funds you're willing to lock up for longer, then a CD could be a good place to get a fixed return.

"As always, you should review your long-term financial plan so that each account you establish has a purpose and the funds are available for the goals you have identified," says Cary.

Learn more about your high-yield savings account options here now.

Open a money market account

Similar to why you might open a high-yield savings account, you can also look into moving some cash into a money market account that pays a competitive interest rate. 

"Money market accounts are similar to traditional savings accounts but typically offer higher interest rates and may require a higher minimum balance," explains Cary. Like traditional savings accounts, money market rates are variable. Money market accounts at banks can also have FDIC insurance, notes Cary. Ones at credit unions have similar protections.

The features and rules around money market accounts can differ slightly from those for regular savings accounts, so compare these options at financial institutions you trust before opening one.

For any of these accounts, "to get the highest returns, you may have to deal with a smaller bank, a credit union or an online bank," notes Gaby C. Mechem, CEO of NIM Retirement Group.

Invest in fixed-income assets

Lastly, you can take advantage of high interest rates now by investing in fixed-income assets. Depending on the specific investment, there might be some risk to the principal you invest. But you also might be able to simply hold whatever fixed-income securities you buy and earn a guaranteed interest rate.

For example, US government Treasury bills and bonds are worth considering, notes Mechem. Another option, albeit more complex, is investing in annuities that provide fixed returns. "Annuities such as multi-year guaranteed annuities offer some of the highest yields available today and also have the additional benefit that the interest on the annuity is tax-deferred," says Mechem.

However, annuities can carry a series of fees, penalties and other nuances that should be carefully considered before purchase. Other fixed-income assets like Treasuries can be more straightforward, albeit the yields might not be as high.

The bottom line

Earning significant interest income in 2024 is still well within reach for many people. While rates might drop this year, there are still opportunities to lock in returns.

"If interest rates fall significantly in 2024, as most experts now predict, banks and credit unions would likely be the first to drop their rates. Insurance companies offering annuities would then follow. If an investor is concerned about falling interest rates, they should lock in the highest rates they can now find for a period of several years or longer," says Mechem.

Even if the opposite happens, where the economy ends up gaining strength and the Fed continues to raise interest rates, that's not necessarily a bad thing for those looking to earn interest income.

If that happens, "investors with CDs, bonds, Treasuries or annuities that are maturing soon could also take advantage of those rising interest rates relatively quickly. Investors whose funds are locked into longer term CDs, bonds, Treasury bonds or annuities could pay early withdrawal fees or surrender penalties to get access to their money to reinvest it in higher rate products, or they could just hold onto their savings investments and enjoy whatever level of interest they are receiving," adds Mechem.

Whatever happens, it's good to stay informed so you can continue to find opportunities to maximize interest income. "In any scenario where rates are changing – rising or falling – it is advantageous for the depositor to stay in touch with their banker," notes Cary.