The days of stashing extra cash in a cookie jar are over - or at least they should be. Today, there are literally thousands of money management options for making some extra money from your savings at financial institutions across the globe and their Internet counterparts. To help you decide which interest-yielding choice is best for you and your lifestyle, consider the following that are widely available.
From passbook accounts to high-yield savings accounts, there are many to choose from and a wide array of interest rates available. Passbook accounts will typically pay the least amount of interest because there usually isn't a minimum balance required or other mitigating factors. The highest yielding savings accounts normally require various commitments, such as a sufficiently large initial deposit, maintaining a high balance over time, limited transactions, or additional banking relationships, such as in the form of a checking account or loan with the same bank.
A CD will generally yield higher interest than a savings account. However, with CDs you are expected to leave your money untouched for a certain amount of time, or pay fines for early withdrawal. The good news is that CD durations are available in lots of timeframes, which means that you can choose what fits your lifestyle and financial habits, as well as your money management plans. If you are nervous about sticking cash away for a long time, go for a 3-month CD. Or, if you can go without your cash for quite a while, you can get a higher annual percentage yield with a longer commitment.
You earn interest in a money market account because your money is actually invested by the bank with that of other money market account holders. Professional money managers take cash from money market accounts and put it in government treasury bills, savings bonds, CDs and other short-term, low-risk investment vehicles. You are then paid some of the interest earned. In exchange for this service and yield, money market account holders are generally limited to just a few transactions in and out of the account, but the money is liquid if you need it, and therefore can be a good money management option. As with other saving options, accounts with a higher balance will typically yield better interest.
Gaining in popularity and availability nowadays as a money management option are interest-yielding checking accounts. Many banks will pay an annual percentage yield (APY) to checking account holders for maintaining a particular balance - and some APYs are tiered according to the balance maintained, with more interest going to the accounts with the highest balances. Since banks are competing for consumer checking accounts, you can regularly find special promotions touting high APY offers.
Whether you have just a little extra money to work with - or a whole lot - there are many investment options available that can provide for a good return. Start researching on the Internet and talk to a local financial or investment advisor to learn more.
Pay Down Debt
If you really want to make the most of your money, make sure your credit card debt is in control. Because this debt accrues significant interest that you have to pay out, your primary money management focus should be to reduce that debt with extra cash you have, versus devoting it to any savings or investment option. You don't have to be completely debt free, but if you do not at least reduce it, the positive interest you gain with other savings or investment accounts could essentially be annulled compared to the interest accrued on the credit card.
