Have some extra cash lying around that you want to start earning interest on? There are a variety of options to put your spare dollars to work, whether you want no-risk interest or higher returns for a bit more effort. Check out these best ways to earn interest on spare cash.
Score Bonds through TreasuryDirect.gov
When it comes to risk-free interest, one of the safest options around is buying US savings bonds directly through TreasuryDirect.gov. Treasury bonds are backed by the full faith and credit of the US government, so unless Uncle Sam defaults, your principal and interest are secure. The interest rates on “I bonds” track inflation, so your returns keep up with rising prices. The composite rate on I bonds is currently over 7% – not too shabby at all! You can purchase electronic I bonds in any increment you want starting at just $25.
To buy, just set up your TreasuryDirect account online. Then you can purchase I bonds with spare cash over time. Just keep in mind I bonds have to be held for at least 12 months, and you’ll forfeit 3 months of interest if you sell before 5 years. But still, it beats keeping the $25 stashed under your mattress!
Earn High Yield with Savings Accounts
If you don’t mind keeping your money stashed in a bank, then high yield savings accounts let you earn over 4 times more compared to traditional savings accounts. The average bank pays only 0.17% APY, while some of the top high yield savings accounts offer over 0.75% APY right now. To find the best high yield savings options, check out sites that allow you to filter accounts by APY, minimum balances, availability nationwide or in your state, and other features. You can often open accounts entirely online without needing to visit a branch.
Some banks have minimum deposits around $1,000 to $5,000 to earn the top rates, so make sure to read the fine print. But once opened, deposits can start compounding monthly and growing your spare cash. Just don’t expect to earn the level of stock market returns.
Supercharge Interest with DeFi Yield Farming
If you have some risk tolerance and want to push interest earning into overdrive, then explore the world of decentralized finance, or DeFi, and yield farming. Through smart contracts and protocols, you can earn double-digit APY on stablecoins and cryptocurrencies. Be sure to browse different farming options to find the one right for you.
Yield farming does take more effort than parking money in I bonds or high yield accounts. You need to research protocols thoroughly, provide liquidity across platforms, stake and unstake positions, compound earnings, and monitor positions to avoid both scam platforms and honest protocols that get hacked. But if you want to turn spare cash into a yield generating engine, DeFi blows savings accounts out of the water. As always in crypto, only farm with money you can afford to lose given the risks involved. But handled properly, yield farming beats stuffing dollars under a mattress any day!
Don’t let spare cash waste away not earning anything. Whether you take the safe Treasury route, seek high yield savings, or explore DeFi protocols, put those extra dollars to work. It’s rewarding to see interest compounding over time.
