I love my online high-yield savings account. I’ve had the account a number of years now, and it was great when the interest rate was just over two percent. But over the past year, the interest rate has slowly been dropping, and now, it’s under one percent.
In fact, as I write this, it’s sitting at 0.60%.
Interest rates are extremely low right now - which is awesome if you want to do something like refinance your student loans. It’s not so awesome if you want to sack away some short-term money.
With these low-interest rates, people have been asking themselves where they can better interest rates now than in their traditional and online savings accounts.
There are a few options. While none of these options have the security of a savings accounts - none of them are FDIC-or-other-entity insured - they do provide a potentially better return on your money.
WorthyBonds sells bonds at $10 increments that earn 5% interest. And although each bond has a $10 increment, you’ll immediately earn interest on your interest - no need to wait until you reach another ten bucks.
Worthy also files with the SEC, so there is some governmental oversite.
Coinbase is probably the most well-known digital currency exchange- digital currency as in cryptocurrency.
What is probably not well-known about Coinbase is that they have a few interest-bearing options. Some of these are paid out by Coinbase, some are earned by staking a certain cryptocoin.
At the time of this writing, I am earning 2.00% with Dai, 4.67% with Tezos (XTC), and 5.00% with Cosmos (ATOM).
Coinbase also offers a measly 0.15% on US Dollar Coin (USDC). I don’t earn that simply because I don’t have anything invested in USDC. I suggest you don’t either - especially since even the 0.60% in the high-yield savings is higher than that.
Of course, since these are cryptocurrencies, the values of the coins themselves are subject to fluctuation. Thankfully, Coinbase offers ways to get free coins via their Coinbase Earn program. You earn coins for taking short lessons on that particular coin. For instance, you can earn up to $50 in Stellar Lumens (XLM) by watching some short videos and answering quick quizzes.
BlockFi is like a bank for your crytpo. They make loans with cryptocurrency as collateral, and they pay interest on deposited crypto.
It’s important to note there is no insurance - FDIC or otherwise - with BlockFi.
The following is their current interest rates at the time of this writing:
- Bitcoin (BTC) → 6.0%
- Ether (ETH) → 5.25%
- Litecoin (LTC) → 5.0%
- Gemini dollar (GUSD) → 8.0%
- Paxos Standard (PAX) → 8.6%
- PAX Gold (PAXG) → 4.0%
- US Dollar Coin (USDC) → 8.6%
Note that some of the above listed coins - such as Bitcoin and Litecoin - are highly volatile in their value. Others, such as Gemini dollar, Paxos Standard, and US Dollar Coin are known as stablecoins and are designed not to fluctuate much in value.
Oh, and BlockFi’s interest rate on the US Dollar Coin is much better than Coinbase’s interest rate - 8.6% versus 0.15%.
Of course, there are always stocks. In addition to a well-diversified portfolio in a traditional or Roth IRA with a low-cost provider such as Vanguard or Fidelity, you can open a free account with a broker such as Robinhood or WeBull and invest in dividend-paying stocks that earn higher rates than what savings accounts are paying right now.