Let Your Bank Bankroll You: Earn Money On Your Savings

Nowadays it's not unusual to spend $6 on a pint of beer, especially if you're into those quadruple-hopped, tropical fruited, barrel-aged specialty brews. Any guesses at how much you'd pay for a pint back in 1955? 67 cents.

Thanks, inflation!

Inflation is responsible for prices slowly increasing over time. It's not a big deal if your wages are going up too, unless you've got a chunk of change sitting under your mattress like Grandma. Grandma's money is slowly losing value to inflation over time, so while her $100 might've gotten her nearly 150 pints back in the day, it's only enough to get her about 16 of those passion fruit sours today.

This is one reason why people stash their savings in the bank. However - we hate to break it to you - that 0.01% interest rate you're getting with any big-name bank is about as good as Grandma's box spring savings account. After all, a healthy inflation rate usually hovers at around 2%, which is 20x what you're earning at Chase Bank (or Bank of America, or Wells Fargo, or any of the top dogs). 

If you don't want to settle for making next-to-nothing on your hard-earned savings, but you aren't willing to put your cash at risk by investing it, there's another way.

The short answer is yes. The long answer is: you've got several different options, and the best one for you depends on how you want to balance risk and reward. Generally speaking, the higher-earning accounts either come with more risk of losing your money, or they make it harder to withdraw your cash on the spot.

You've got to decide what this money is for, whether or not you can risk losing it, and how easily you need to be able to access it. If you've only got $500 standing between you and not being able to make rent, that's money you want to keep safe and easy-to-access. On the other hand, if you've got over six months worth of living expenses saved up, you can probably afford to play around a little in search of higher returns.

As it turns out, the internet is good for more than just wasting hours of your day scrolling through cat videos and embarrassing viral tweets. There are now dozens of online banks with accounts that are cheaper and better than the same fee-ridden, unrewarding accounts brick-and-mortars have been offering for centuries.

Most online banks have a high-yield savings account that's completely free and earns an interest rate that puts standard banks to shame. Axos Bank, for example, will get you a 0.60% interest rate on your savings, which is 60x what you'd earn elsewhere. The account is fee-free and even comes with an optional ATM card to make it even easier access your money when you need it.

If savings accounts and investing had a baby, that baby would be a CD. There's no risk of losing your money with a CD, and generally speaking, they pay out a higher interest rate than high-yield savings accounts. However, in exchange for that higher rate, you agree to keep your money locked up for a certain period of time. 

There are CDs ranging from a few months to 5 years or more, and the longer you agree to keep your money in a CD, the higher your interest rate. While you can technically cash out your CD before it matures, you'll have to pay a penalty for doing so. Online banks like Quontic usually offer CDs with the best rates.

With Worthy, you can earn a fixed 5% interest rate on your money and cash out at any time. The catch here is that it's not insured like a savings account, so it's a little riskier. You're essentially lending Worthy money (in the form of buying their 5% yield bonds), which they then lend to small businesses. 

While these businesses can default on their loans, Worthy makes sure the loans are backed by assets like inventory or property. That way, if a business defaults, they can sell off their assets to repay their Worthy loan. If you're willing to take on a little risk to earn more on your money, Worthy is worth giving a shot.