How to earn 5% interest or more on your money (2024)

Over the past year, the cost of just about everything has skyrocketed — from gas to groceries and housing. And while inflation appears to be cooling, these high costs are still causing Americans' budgets to be stretched to the max. In turn, many people are looking for innovative ways to earn better returns on the money in their savings and investments.

The good news is that the battle to tame inflation is making it easier than ever to find these opportunities. The Federal Reserve has increased interest rates numerous times over the past year, resulting in more expensive borrowing costs — but also higher-than-average rates on certain types of accounts.

What's even better is that many of these accounts are offering rates of 5% or more on what you deposit. This presents a great opportunity to earn more interest than normal on your money, but it's important to choose the right account for you.

Get a head start on your interest earnings. Find out the top savings rates available to you right now.

How to earn 5% interest or more on your money

If you want to earn interest rates of 5% or higher, consider the following options available right now.

Put your money into a certificate of deposit

A certificate of deposit (CD) is a low-risk, interest-bearing deposit account offered by financial institutions like banks and credit unions. CDs generally offer higher interest rates compared to regular savings accounts because they require you to lock in your money for a specific term, which can range from a few months to several years.

Right now, there are numerous CDs offering 5% APYs on your money, and many of these accounts have low minimum deposit requirements or shorter terms. It may even be possible to find CDs offering even higher rates. If you want to maximize your interest earnings, be sure to shop around and compare, as different financial institutions offer different interest rates on CDs.

The one potential downside to be aware of with CDs is early withdrawal penalties. If you need access to your money before the CD's term ends, you may incur penalties, which could eat into your earnings. To avoid these fees, ensure you can commit to the CD term before investing.

Learn more about what CD rates and terms are available to you here now.

Open a high-yield savings account

High-yield savings accounts are a convenient and flexible option for earning a higher return on your savings compared to traditional savings accounts. These accounts work very similarly to regular savings accounts, only they typically offer higher interest rates on your money.

While the average regular savings account rate is currently about 0.42%, there are numerous high-yield savings accounts offering 5% or more on your money without any large minimum deposit requirements. And most of these accounts offer more flexibility than CD accounts — so you can withdraw your money when you need to — but the terms and conditions vary by account.

One thing to note is that online banks will often offer better high-yield savings account rates due to lower operating costs. To get the most out of your money, look for reputable banks with no fees and competitive rates. And because these accounts earn compounding interest, try to leave your money to grow in the account so you can watch it work for you.

Consider a money market account

A money market account is another low-risk option that often provides higher interest rates than traditional savings accounts. These accounts work similarly to savings accounts, and many come with check-writing capabilities, making them a suitable option for emergency funds while still earning a higher return.

There are numerous money market account options right now offering rates of 5% or higher. But if you want to take this route, it's important to know that some money market accounts can have steep minimum balance requirements — and may only offer the better rates on larger deposits. So while a particular money market rate account may look excellent to you, just make sure you meet these criteria to access that rate.

You should also research various financial institutions to find the most favorable rates and fee structures. As with other interest-bearing accounts, online banks or credit unions may offer more competitive options.

The bottom line

Earning a 5% or higher return on your money in today's economic landscape doesn't have to be challenging, and these three methods offer viable opportunities to maximize your savings. Before you make a decision, remember to stay informed about current interest rates, fees and terms to make the most of your financial decisions. With a thoughtful approach, you can secure your financial future and achieve your money-saving goals.