Several good alternatives to savings accounts include certificates of deposit (CDs), money market accounts (MMAs), and U.S. government securities. These are all relatively safe places to invest your money, with deposits guaranteed by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).
CDs, MMAs, and U.S. government securities also offer some return on your money in the form of interest. If you prioritize keeping your money safe, you may want to ensure easy access and relatively low fees above high returns—but there are many safe accounts with good yields.
Key Takeaways
- Deposit insurance for savings accounts covers $250,000, as guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts.
- Certificates of deposit issued by banks and credit unions are also insured for up to $250,000, guaranteeing your deposit and any interest returns you earn.
- Money market accounts are worth considering as well. They're FDIC-insured and combine features of checking and savings accounts.
- U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government guarantees timely payment of interest and principal, backed by its full faith and credit.
See the best CD rates or best MMA rates available today, or learn how to buy Treasury bonds and bills. If you're still considering savings accounts, check what you could earn with the best high-yield savings accounts.
Where is the safest place to put your cash? You could put it under your mattress, but there are actually safer places to store your money. With the right type of account, you can protect your funds while also earning a return. A savings account is an ideal place to keep your cash safe and earn a yield. Let's explore nine other safe places to keep your money.
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Certificates of Deposit (CDs)
Certificates of deposit issued by banks and credit unions carry up to $250,000 in deposit insurance (assuming the bank or credit union is insured). A CD requires you to lock up your investment for a specified period, from several months to several years. You can't add more money to the CD during this time.
You'll usually pay a penalty if you want to access your money before the CD matures. The penalty varies but usually adds up to several months' interest. However, many CD types are available, including no-penalty CDs, step-up CDs, and raise-your-rate CDs, which can help relieve the interest rate or term-length risks.
Typically, CDs with longer terms pay more interest than CDs with shorter terms, although this isn't always true. Depending on the current rate environment, you may find that CDs tend to have better rates than savings accounts, or vice versa.
A CD ladder can help grow your earnings while providing periodic access to your money. With a CD ladder strategy, you open several CDs with different maturities. For example, you might open one 6-month CD, one 12-month CD, and one 18-month CD. As each CD matures, you can decide whether to withdraw or reinvest the money. This strategy may offer you greater flexibility and less risk than opening one CD (with one maturity date).
Even savings accounts aren't totally risk-free. For example, if you leave your money in a savings account earning a low interest rate, your money's growth may not keep up with inflation. After considering inflation, the $1,000 you put in last year may be worth less next year. You might also miss out on earning a higher return elsewhere.
Money Market Accounts
Money market accounts are FDIC- or NCUA-insured, up to $250,000 per depositor, per bank. They earn interest and combine many of the features of checking and savings accounts, making them a good choice if you want to grow your money while maintaining easy access to it. MMAs typically come with debit cards and limited check-writing privileges.
Money market accounts often have fees, along with minimum opening deposit requirements and minimum balance requirements. Transaction and withdrawal limits may apply. The best money market account rates may rival those of the best CDs and savings accounts.
U.S. Treasury Bills
U.S. Treasury bills, also called T-bills, are federal, short-term debt obligationswith a maturity of one year or less. Treasury securities may pay interest at higher rates than savings accounts, although it depends on the security's duration. The longer the maturity, the more interest the investor typically earns. Investors can purchase T-bills in increments of $100 through the secondary market in various ways, such as through a broker or investment bank or at auction on theTreasuryDirect.gov website.
U.S. Treasury Bonds
U.S. Treasury bonds, also referred to as T-bonds, take the longest to mature among government-issued securities. U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Treasury bonds generally pay the highest interest rates. They are offered to investors for a term of 20 or 30 years to maturity.
Investors can purchase T-bonds at monthly online auctions held directly by the U.S. Treasury, with initial offerings and reopenings alternating throughout the year.
Although there are valid reasons to sell early, you could lose money if you sell a U.S. government security before it matures. Investors need to consider their timelines carefully before buying.
U.S. Treasury Notes
U.S. Treasury notes, also called T-notes, are similar to T-bonds. The difference is that T-notes are offered in a wide range of terms (from two years to 10 years). While T-notes do not usually generate yields as high as T-bonds, they do generate a payment for investors twice a year (or every six months). You can purchase T-notes in increments of $100.
Checking Accounts
Checking accounts are safe places to keep your money because they are FDIC insured for up to $250,000, per account. If you have more money than that, you can consider putting the remainder in an account with another bank. Checking accounts generally earn fairly low interest compared to other options for where to put your cash. But you can compare the rates on some checking accounts with the highest yields.
Corporate Bonds
Corporate bonds are not backed by a government, they're backed by companies. As a result, they often carry higher risk. However, many corporate bonds from established companies are considered safe investments, and they can provide a higher yield than government bonds.
Municipal Bonds
Municipal bonds are backed by state or local governments, not the federal government. Like Treasuries, municipal bonds offer a safe place to put your cash and a way to get reliable income.
Gold
Gold can fluctuate in price, but is generally considered a safe investment as it's value has steadily increased over time. Keep in mind that there is no guarantee that gold's price will remain stable or rise. You can invest in gold in several ways, including by buying bullion or buying into a mutual fund that invests in gold or gold companies.
Frequently Asked Questions (FAQs)
Where Is the Smartest Place to Keep Money?
The 10 smartest place to keep your money are:
- High-yield savings accounts
- Certificates of deposit (CDs)
- High-yield checking accounts
- Money market accounts
- Treasury bills
- Treasury notes
- Treasury bonds
- Municipal bonds
- Corporate bonds
- Gold
What's best for you will depend on how easily you want to withdraw your money, whether you want your funds to be insured, and your target returns.
What Is the Most Secure Place to Keep Money?
You have several options for keeping your money secure. You can keep your money in a checking account, savings account, money market account, or bond, among many other low-risk investment choices. That way, your money will be secure and can potentially earn interest.
How Can I Protect My Money From a Bank Collapse?
As long as the financial institution is insured by the FDIC or NCUA, the money you put into a deposit account at a bank or credit union is insured for up to $250,000 per depositor, per bank. If the bank collapses or fails, you can still get your money back within a few days of the bank's closure. If you have more than $250,000, you may want to spread it throughout multiple banks to avoid uninsured deposits.
Where Is the Safest Place To Keep Cash?
Deposit accounts—like savings accounts, CDs, MMAs, and checking accounts—are a safe place to keep money because consumer deposits are insured for up to $250,000, either by the FDIC or NCUA. If you want to store cash at home, you might consider keeping it with copies of your important paper documents in a waterproof, fireproof safe.
The Bottom Line
If you're seeking a safe place to keep your money besides a savings account, you have several alternatives to explore. Consider how soon and how often you might need to access your cash—many options don't offer the liquidity of a savings account. Depending on the account, you might face withdrawal limits or pay a penalty to withdraw your money before the account reaches maturity.
