With savings rates remaining high at most banks, you have plenty of places to park cash in 2024. Of course, you don't want to throw your money in just any old account. You want to mull over your choices and pick one that's going to offer you the best growth opportunity. With that in mind, let's look at our latest roundup of the best places to park your cash.
1. Certificates of deposit (CDs)
Certificates of deposit (CDs) are one of the hottest bank products on the market today. Unlike checking and savings accounts, CDs have fixed interest rates which can lock in today's best rates until the CD matures. They're also backed by a bank's FDIC insurance, making them a safe investment.
CDs have some risks, however, with the most common being its early withdrawal penalty. These penalties will deduct some of your earned interest (or principal) if you request a withdrawal before the CD matures. That said, you could get a no-penalty CD, which would allow you to liquidate your account without paying any fees.
Right now, the best CDs have rates above 5%, but some short-term CDs may have rates closer to 5.50%. To give you some perspective, here's a look at three of the top CDs we've found that are available today.
- Western Alliance Bank CD: 3-month, 4.30%
- Bread Savings CD: 1-year, 4.90%
- Quontic CD: 1-year, 4.50%
2. Treasury bills (T-bills)
Treasury bills (T-bills) are similar to CDs in that they have fixed rates and can promise guaranteed returns. Unlike CDs, however, T-bills are issued by the federal government and are limited to terms ranging from four to 52 weeks. You can purchase T-bills at auction through the U.S. Department of Treasury's website (treasurydirect.gov), or through most brokers, though you may have to pay fees if you choose this route.
As far as rates go, T-bills are very competitive. T-bills often have rates on par with or better than CDs. For example, here are T-bill rates from auctions within the last two weeks (with issue dates ranging from Feb. 20 to Feb. 29, 2024).
| T-bill Term | Investment Rate |
|---|---|
| 4-week | 5.395% |
| 8-week | 5.407% |
| 17-week | 5.395% |
| 26-week | 5.34% |
| 52-week | 4.95% |
Data source: TreasuryDirect.
One major advantage of T-bills is that you don't have to pay state taxes on your returns. This gives them a slight edge over CDs, whose earned interest triggers a tax bill on the state level if you live in a state that levies income taxes. You can also sell T-bills on a secondary market, which might give them greater liquidity than bank CDs.
3. Money market accounts (MMAs)
Money market accounts (MMAs) are like a cross between a high-yield savings account and a checking account. Like savings accounts, MMAs offer competitive APYs. But like checking accounts, most MMAs come with check-writing privileges or debit cards, allowing you to withdraw cash more easily.
Unlike CDs and T-bills, money market accounts have variable APYs, meaning your savings rate could change immediately. That said, if you don't want to lock up your cash, MMAs could offer a better alternative for both growth and security. To give you an idea of how much you could earn, here's how much some of the best MMAs are paying out.
- American First Credit Union Money Market Deposit Account from Raisin: 5.18%
- Vio Bank Cornerstone Money Market Savings: 5.30%
- Pacific Western Bank Money Market Deposit Account: 5.27%
Each of these three accounts can offer you security and growth. If you want more substantial growth, I'd recommend opening a brokerage account and investing in some growth stocks. Otherwise, check out the best rates for each of these three investments and start earning interest on your savings.
