Want to Earn Interest on Your Money? Good Luck With That

The other day, a friend asked me how she can earn higher interest on her money in the short-term.

My reaction? I laughed.

Maybe that wasn’t the right response, but the sentiment would have been the same if I told her it’s nearly impossible right now, unless you want to take a risk. And like me, she’s the financially conservative type. You can gamble on the stock market — which does seem to be on an upward tick — for now — but there’s no guarantee you won’t lose your investment, never mind actually make a buck or two.

Interest rates on savings accounts and certificates of deposit are so minuscule, they’re almost non-existent. I remember getting 5.5% interest on a 180-day CD a few years ago, but you’ll be lucky to get 1% on a 2-year CD. And those online banks everyone was heralding a few years ago? Same thing. Now that Capital One’s buying up famed Internet bank ING Direct, fahgeddaboudit!


Our Current Interest Rates

Interest rates at banks are laughable right now. Here’s a quick breakdown of the interest we’re “earning” at our community brick-and-mortar bank (the rates are compounded daily):

Checking: .30%

Savings: .39%

Youth Account: .45%


So what is a cautious investor to do? If I wanted to lock up our cash in a 2-year CD (certificate of deposit), it’d earn a paltry 1.095%. Five years? 1.735%. Money market accounts aren’t doing much better, and novice investors aren’t going to be comfortable with ETFs and REITs.

The only thing left is gambling on the stock market, and you have to hold those investments for a year or be subject to higher taxes because of short-term gains — which could negate any profit you’ve made.

In a nutshell? There’s really no surefire way to earn high interest on short-term investments. At least, not for conservative investors like myself and my friend.

Are your bank’s interest rates so low that they make you want to cry? Where are you putting your money these day so it earns some interest?