Receiving extra cash, such as an inheritance, bonus or even your tax refund, can help level up your savings game. Spare funds give you a chance to invest, pay off debt, put money toward your home equity and more. On top of that, having extra funds during uncertain times, such as a recession, can give you the opportunity to build an emergency fund in case disaster strikes.
With extra savings, it’s important to consider where to put your money to work so it can grow as well as how accessible you need your funds to be.
From bonds and money market accounts to high-yield savings accounts, such as a Marcus Online Savings Account, you can earn returns on your extra cash.
1. High-yield savings account
High-yield savings accounts are savings accounts with a higher annual percentage yield (APY) than traditional bank accounts. They’re offered by credit unions as well as physical and online banks.
The APY for high-yield savings accounts fluctuates with the market and will depend on the institution behind the account. For example, Marcus by Goldman Sachs currently offers a 2.35 percent APY on its online savings account as of October 21, 2022.
High-yield savings accounts allow account holders the flexibility to withdraw their funds when needed while offering a similar interest rate to certain types of bonds and certificates of deposit. This can make a high-yield savings account a good place to store an emergency fund or money for a big purchase like a vacation.
2. Certificates of deposit
A certificate of deposit, or CD, allows you to earn interest on a deposit in your bank or credit union in exchange for keeping the money stashed in the account for a certain amount of time.
You can shop around for different types of CDs, including jumbo CDs for large deposit amounts and add-on CDs that allow you to make additional deposits throughout the term. Generally, the rate on a CD stays fixed throughout the term, meaning you’ll always know how much you’ll get back when it’s time to cash out.
Financial institutions will typically offer different terms with different interest rates. In general, the longer a CD, the greater the rate you’ll be offered.
A CD term usually ranges from a few months to five years and may come with options to extend the term in exchange for a better rate. A Marcus High-Yield CD, for example, offers a 2.50 percent APY for its 6-month CD, while a 5-year CD will snag you a 3.50 percent APY as of October 21, 2022.
While CDs can be a good way to get a guaranteed return on investment, if you need the money before the term ends, you can get hit with a stiff penalty that may eliminate any interest gains – and even cut into the principal.
If you know you won’t need the funds for a certain amount of time, a CD can offer a better interest rate than a standard savings account. However, it’s less liquid and can incur some high penalties with early withdrawal.
3. Money market account
Money market accounts can offer a better interest rate than traditional savings accounts with an extra layer of flexibility. Unlike savings accounts, money market accounts often allow you to write checks and can come with a debit card for purchases and ATM withdrawals. However, direct withdrawals are limited to six per month.
The key benefit of a money market account is flexibility. Unlike CDs, you can withdraw your money at any time without penalty as long as you don’t exceed six monthly withdrawals. This makes money market accounts a good option for an emergency fund or other short-term money storage. However, some money market accounts come with fees or minimum deposit requirements, and the interest may not be as good as other methods.
4. Treasury securities
Treasury securities are backed by the U.S. federal government and provide a fixed interest rate over a set period of time, depending on the type of security you purchase.
Different securities come with different rates and maturities.
- T-bills have the shortest maturity rates, spanning from a few days to a year.
- T-notes have a maturity of two to ten years.
- T-bonds have the longest maturity rates of 10 to 30 years and generally have the highest interest rates among the three securities.
Treasury securities are also tradable on the secondary bond market, so you can sell them instead of having to cash them out, making them more liquid than a CD.
When maturity is reached, the investor receives both the amount they invested in the bond and the accrued interest. This makes treasury securities a fairly low-risk investment, especially considering the U.S. government backs them.
Treasury bonds can provide a secure way to store your funds and earn interest, but some of the long maturity lengths mean your money can be locked up for some time.
Although the secondary bond market offers some liquidity, bond prices can fluctuate. It’s possible to sell a bond on the market for less than what you’d receive with the maturity rate, making it less reliable than waiting it out. Moreover, a fixed interest rate means that if inflation increases, you’ll be stuck with a return that may not provide as much value in the future.
5. Series I Bonds
Another way to grow your extra cash is by purchasing a Series I bond from the U.S. Treasury. These bonds are backed by the federal government and earn interest through a combination of a fixed rate and a variable rate.
The fixed rate remains the same for the life of the bond, up to 30 years. The variable rate is determined twice a year. As of October 2022, the current I bond rate is 9.62 percent.
Only U.S. citizens, U.S. residents and civilian employees can purchase I bonds, and you’ll need to register with TreasuryDirect to purchase them. Alternatively, you can use your tax return to purchase bonds through the IRS.
While I bonds can be a good way to protect your money from inflation, they’re not as liquid as other savings methods. You can’t cash out your bond for 12 months after purchase, and any bonds cashed out before five years will incur a penalty of three months’ worth of interest.
However, I bonds can be a good place to squirrel away cash for longer-term savings goals, such as college funds or a home renovation.
Growing your savings with Marcus by Goldman Sachs
A high-yield savings account with a competitive rate could provide consistent returns and accessibility to funds. If you’re looking for something like this for your extra cash, then Marcus by Goldman Sachs might be for you.
As of October 21, 2022, Marcus offers an APY of 2.35 percent. Marcus offers easy online access, allowing you to open an account from your desk at home. The Marcus app has a variety of tools for banking on the go, such as account linking, same-day transfers in certain situations, deposit scheduling and 24-hour, seven-days-a-week account assistance.
Marcus can give you access to a competitive APY, as well as the financial tools and services Goldman Sachs has to offer. For example, you can track your finances with the Marcus Insights app or learn more about the other savings services Marcus has to offer. Your Marcus account can be the launching point for your financial relationship with Goldman Sachs.
If you’re looking for an accessible place to help grow your money and a resource hub for financial education, then Marcus may be for you. For more information about the Marcus Online Savings account, the Marcus product suite and associated disclosures, visit the Marcus website.
Check out the comparison table below to see how Marcus stacks up against other money saving and growth methods.
Comparing ways to grow your savings
|What is it?||Maturity length||Withdrawal conditions||Return rate/APY||Requirements|
|High-yield savings account||Savings account with a high interest rate||None||Can be withdrawn from directly||0.01% to 2.90%||Deposit and balance minimum (varies by bank); possible credit check|
|Certificate of deposit||Bank-backed deposit that accumulates interest over maturity length||3 months to 5 years||Maturity reached or penalty is incurred||0.99% to 1.07%||Minimum deposit (varies)|
|Money market account||Interest-accruing account with checking and debt capabilities||None||Can be withdrawn from with card or check||0.16% (average)||Deposit and balance minimum (varies by bank); possible credit check|
|Treasury securities||Treasury-backed bonds with a fixed interest rate||A few days to 30 years||Maturity reached; bonds can be sold on secondary market||1.69% to 4.50%||Minimum purchase of $100|
|Series I Bonds||Treasury-backed bond with fixed and variable interest rates||30 years||Maturity reached; can be redeemed without penalty after 5 years||9.62%||U.S. citizen, resident or civilian worker; minimum purchase of $50 (paper)|
|Marcus by Goldman Sachs Online Savings Account||Savings account with a high interest rate||None||Can be withdrawn from directly||2.35%||No minimum deposit or credit check|
Note: Annual percentage yields (APYs) shown are accurate as of October 21, 2022. APYs may have changed since they were last updated.
The bottom line
If you have some extra money to work with, don’t let it lose value stuffed in your mattress. Bonds, CDs and interest-bearing bank accounts can all allow your spare cash to grow until you’re ready to spend it and diversify your current portfolio.
While no one method is the best, it’s important to consider your circumstances when deciding where to put your funds. While some routes, like bonds and CDs, can offer better interest rates, putting your money there can lock up your funds longer than you’d like. Money market and high-yield savings accounts both offer more liquidity while offering some interest accrual, though not at the same rate as I-bonds, T-bonds or longer-term CDs.
A Marcus Online Savings Account offers a competitive interest rate, flexible online account tools and resources to help you save and grow your money – all backed by Goldman Sachs. If you’re looking for a place to park your cash, Marcus may be worth considering.