A savings account may not always be the best option, whether you have a little set aside for a rainy day, an emergency fund, or some money for a future financial goal.
Although brick-and-mortar bank savings accounts were once the go-to for excess cash, they no longer offer the best terms (in most cases). In fact, most traditional banks offer an average interest rate that’s unlikely to keep up with inflation.
If you’re looking to earn a return on your savings, you may want to consider savings account alternatives. So, here we’ll cover some of the best alternatives available today.
Savings Account Alternatives
Robinhood Gold is an optional subscription available to Robinhood users. There are a few significant benefits:
- Earn a competitive interest rate on your uninvested cash.
- Get bigger instant deposits ($5,000 – $50,000) so you can invest right away rather than waiting for deposits to clear.
- Professional research data from Morningstar.
- Level II market data from Nasdaq.
Robinhood Gold costs $5 per month (free for the first 30 days). Active traders and investors are likely to appreciate the perks and find the data to be helpful.
The higher interest rate on uninvested cash allows you to use Robinhood as a savings account alternative. The uninvested cash is swept into an account with one of Robinhood’s partner banks, and you can easily access it whenever you’re ready to invest.
Uninvested cash held in your Robinhood brokerage account is insured by SIPC (up to $250,00 for cash claims). Once it is swept to the partner banks, it’s eligible for FDIC insurance up to $1.5 million.
The Cash Reserve is Betterment’s high-yield cash account, providing a solid alternative to the traditional savings account. According to FDIC data, the account offers above the national savings rate average and carries no minimum balance requirements or monthly maintenance fees. You can open a sole or joint Betterment Cash Reserve account.
One of the attractive features of this account is that you can separate your funds into different savings goals. You can even automate your savings by setting up auto-deposit rules. This will allow you to set aside money for an emergency fund, vacation fund, and other goals with one account.
Betterment Cash Reserve deposits are also FDIC insured. There’s up to $1 million in coverage for individual accounts and $2 million for joint accounts. However, these accounts don’t have an associated debit card. You’ll need to rely on electronic and wire transfers to access your funds and transfer money between your other accounts and your Cash Reserve. Betterment does not impose a fee for any incoming wire transfers, but you may have a charge from your bank to send one.
The main caveat for Cash Reserve accounts is that they’re only available for Betterment clients. This means that cash transfers are conducted through your Betterment brokerage account. However, since Betterment is not a bank, the accounts are not subject to the typical savings deposit transaction limits. So, you can move money in and out of your account as often as you like.
Cash management accounts like Wealthfront Cash provide a hybrid of checking and savings accounts. They’re typically offered by non-bank financial providers, but they can provide a great alternative to savings accounts. Wealthfront sweeps the cash balance in its customer account into a third-party bank that provides FDIC insurance on its deposits.
Wealthfront Cash offers a higher interest rate, several times the national savings average, with no withdrawal or maintenance fees on the account.
The Wealthfront Cash account provides some nice benefits, including early direct deposit of your paycheck. You can access your funds up to two days early and use a debit card to make purchases and withdrawals from your account. You can also use the account to enroll in bill pay and link to peer-to-peer apps such as PayPal, Venmo, or Cash App.
Wealthfront also has several automated investing and saving tools. For example, you can set a maximum account balance and then automatically move additional cash to your other accounts, such as your investment account or IRA.
The account also makes it easy to transfer money quickly into your Wealthfront investment accounts.
If you’re looking for a very safe alternative to a savings account, you may want to consider U.S Treasury Securities. These come in the form of T-bonds, T-notes, and T-bills and are issued by the U.S. government.
Treasury securities allow the government to raise funds, but they’re guaranteed to receive the face value of the investment upon maturity. The only risk of default is if the Government fails. Since 1776, the U.S. Treasury has always paid back its lenders.
However, this may not be the right choice if you’re looking for an inflation hedge. U.S. Treasury securities tend to offer higher rates than you would get with a standard online savings account, but they’re designed as long-term investments. Some treasuries have up to 30-year maturity. Although there’s a secondary market to buy and sell them, the value of your bond, note, or bill on the secondary market will be lower if the interest rates have gone up.
The online brokerage Public has recently added the option of investing in treasuries. There are fees involved, but Public makes the process of investing in treasuries much easier and more straightforward than it’s been in the past. You can buy and sell at any time, which makes it more viable as a savings account alternative.
Public.com offers fractional shares so anyone can start investing. You'll love the social aspect that makes it possible to connect with other investors. Get a free stock slice worth up to $300 when you open an account through our link.
- Commission-free trades of stocks and ETFs
- Buy and sell 27 different cryptocurrencies
- Fractional shares
- Access to alternative investors
- High-yield Treasury accounts
- Easy to use and beginner-friendly
- Connect with a supportive community of investors
- "Themes" help you to find investments that interest you
Tellus started as a real estate and property management app, but it now offers various financial services, including loans and cash management accounts. Tellus Boost is a high-yield cash management account with daily compounding interest, providing an alternative to the traditional checking or savings account. The account offers highly competitive rates that compound daily.
However, what makes the account really interesting is that there are boosts to your interest rate. There are daily boosts offered for things like daily logins or personal finance quizzes. Extended boosts last longer than one-day boosts and are earned with special activities such as referring friends to the platform. This can increase your rate by 1% for 30 days, earn double the rate for a week, or other rewards.
Tellus also has some accounts that help you to set aside money for specific purposes. For example, the Tellus Reserve account offers a higher rate on balances up to $2,500. There are also Stacks that help you to save for personal goals. You can customize your Stacks with different targets and descriptions for different goals. You need a minimum balance of $125 for Stack Accounts, but you can apply boosts to your Stack accounts.
6. Titan Cash
Titan Cash is another cash management account offered by the Titan investment platform. Titan has an active management strategy that’s not a typical robo advisor and not a traditional financial advisor. This platform is not designed to help you to build a diversified portfolio. Rather, its specialty is picking specific securities and alternative investments, which can involve a high investment risk with the potential for outsized returns.
The Titan Cash account allows you to earn far more than the average national savings rate. However, there are Titan account fees. If your account has more than $10,000, there’s a 1% annual fee. For accounts with less than $10,000, you’ll pay a $5 per month maintenance fee.
As a secure cash account, Titan Cash allows you to invest your excess funds easily. You can click on a button on the app home screen and designate how much you want to allocate to investing. Since these funds are held in a Titan Cash account, they’re eligible for faster execution times when you’re ready to invest.
You can withdraw funds from Titan into a Titan Cash account anytime in a few simple steps from within the app.
7. M1 Finance
M1 Finance is a well-regarded trading platform, and M1 Spend is just one of its features. This checking account provides digital banking services and even a credit card option.
M1 Spend is a seamless integration account for checking facilities with investments. You can use the account to transfer money, set up direct deposits, and even spend with a debit card.
The account has no minimum balance, and all deposits up to $250,000 have FDIC insurance. As an M1 Plus member, you can enjoy a competitive interest rate on your funds and 1% cash back when using your debit card. This provides a great alternative to a standard savings account or money market account.
You can also qualify for an Owners Rewards Card. This unique credit card offers up to 10% cash back when you spend in companies you’re invested in via the M1 Platform.
Plus, customers can also access Smart Transfers, which allow you to set rules to allocate excess cash towards investing through your brokerage accounts, maxing out your annual IRA contributions or into your spending account. You can layer the rules so that cash management is performed automatically to match your needs.
Acorns is a low-cost passive investment platform ideal for investing newbies looking for an alternative to online savings accounts. The app has a simple interface that’s easy to understand, and there are five main investing and saving products.
Acorns Invest is a taxable investment account that directs money into ETFs chosen according to your financial goals and risk tolerance. You can fund your account via recurring deposits from $5 each, on-demand deposits, or roundups.
Acorns Later is an IRA made up of ETFs, so you can plan for your long-term financial health. The other specifically investment-focused product is Acorns Early, which allows parents to set up an account for their children.
Acorns Spend is a checking account offered with a debit card and minimal fees. You can use Smart Deposit to automatically move money from a direct deposit, and Acorns will even reimburse you some ATM fees.
Acorns Found Money is an online marketplace offering cash back on purchases you make at a comprehensive list of major retailers. Any cash back you accrue is directed into your Acorns Invest account.
Acorns is considered a low-fee platform, with personal plans at $3 per month providing access to Found Money, Later, Spend and Invest. However, if you want to access Acorns Early, you’ll need a family plan that costs $5 per month.
You may find Short Term Notes from EquityMultiple appealing if you’re an accredited investor. This savings alternative has been designed to exceed typical saving expectations.
Short Term Notes are a relatively new type of EquityMultiple offering. The notes have been built to offer investors attractive rates of return while maintaining accessibility. This is a short-term investment that’s comparable to corporate bonds. Essentially, the notes will help pre-fund designated real estate investments on the platform. In return, you’ll receive monthly interest payments.
The initial Short Term Notes were offered with a 180-day term, with principal repayment for investors at maturity. However, EquityMultiple also offers six-month terms. The rates vary depending on the length of the hold. If you invest in a longer-term note, you’ll receive a slightly higher rate.
These notes are the first savings alternative product offered by EquityMultiple, but they have been created to provide short hold periods for maximum liquidity. They can also be another way for diversification and short-term yields.
10. High-Dividend Stocks
Finally, you could consider high-dividend stocks. If you’re new to investing, dividends are payments companies make to shareholders from their earnings. Typically, dividends are paid each quarter, but some companies pay semi-annually or annually. Although public companies are not required to pay shareholders dividends, many do, particularly older, more established companies.
Before considering this option, you need at least a basic understanding of dividend yield. This is the amount of dividends the company pays each year divided by the stock price.
However, as with any type of investing, there’s no sure thing when you invest in high-dividend stocks. For example, although a company may initially have a high dividend yield, if the company earnings drop, the company is likely to lower the dividend payments or stop paying dividends altogether.
See our Dividend Aristocrats list for stocks with an excellent track record of paying dividends.
Final Thoughts on Savings Account Alternatives
There are some great savings account alternatives if you have some cash, but a savings account or checking account is not particularly appealing. However, as with any financial product, you must assess the risks and weigh them against the potential gains before committing any funds.