Other funds that you expect to use within the next year or two — say, for a down payment on a home — should also be kept in a low-risk account even though they are paying low rates, she said.
Online banks, which generally lack brick-and-mortar branches, typically pay higher rates, but still aren’t paying anywhere near the 2 percent interest they offered last year. Now, their rates are typically below 1 percent, even on so-called high-yield savings accounts. Ally Bank, for example, is offering 0.8 percent on its savings account; Capital One is offering 0.6 percent. (Your $5,000 deposit would earn you $40 at Ally and $30 at Capital One after one year, assuming you didn’t make additional deposits.)
Certificates of deposit, which lock in a rate for a fixed period, aren’t much better, and you’ll typically pay a penalty if you take the cash out early. Marcus, Goldman Sachs’s retail bank, is paying 0.85 percent on a one-year C.D.
If you really want to earn more, you may have to take on extra risk. One potential option to consider are “ultra” short-term bond funds, which invest in a mix of government bonds and high-quality corporate debt with terms of one year or less. But it’s important to know that they aren’t risk free.
“Yes, you’ll get a higher rate,” Ms. Costa said. “But there is the possibility of losing some money.”
Corbin Blackwell, a financial planner with the online adviser Betterment, said that while savings rates were quite low, they were better than leaving your money in a traditional checking account. If you’re comfortable with taking some risk, she said, another option may be to invest your cash conservatively, in a mix of 15 percent stocks and 85 percent bonds.
Here are some questions and answers about savings rates:
Are there C.D.s that don’t carry a penalty for early withdrawals?
Yes. Many banks, including online banks, have no-penalty C.D.s, which guarantee a rate for a specific term and don’t charge for early withdrawal. The downside: The rate will be a bit lower than a traditional C.D. of the same term. But if you don’t want to worry about access to your money, this can be a reasonable option.