Keeping Lots of Money in Your Checking Account? Here Are 3 Better Places for Your Cash

Checking accounts are great for keeping your money safe and easily accessible, but they're not meant to hold your cash over the long term. They're only meant for funds you'll need to pay your monthly expenses. Keeping more cash here could cause you to miss out on valuable opportunities to grow your wealth.

The right home for your savings depends in part on your priorities and when you plan to use the cash. Here are three of your best options right now.

1. A high-yield savings account

A high-yield savings account helps you earn interest on your funds while keeping your cash accessible. You can link yours with a checking account to make transferring funds quick and easy. Plus, most don't charge monthly fees or impose minimum balance requirements.

High-yield accounts also offer interest rates well above the 0.46% national average for savings accounts. The Discover® Online Savings account, for example, has a 3.75% APY. If you're interested in opening one, check out our link -- it only takes a few minutes to apply online.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 4, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 4, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

2. A certificate of deposit (CDs)

A certificate of deposit (CD) could be a better choice if you hope to lock in your interest rate over a period of months or years. The guaranteed annual percentage yield (APY) gives it a huge advantage over savings accounts, which have variable APYs, when rates are falling. That's the situation we find ourselves in now with more rate cuts coming, possibly as soon as Nov. 7, 2024.

Certificates of deposit (CDs) let you lock in your rate for anywhere from a few months to five years or more, depending on its term. However, you must be comfortable forgoing access to your cash during that time. If you withdraw your cash before the CD term ends, you usually pay a penalty equal to several months of lost interest.

Long-term CDs are the way to go if you hope to maximize your CD returns right now. But short-term CDs of one-year or less still have the highest APYs for the time being. LendingClub CDs have some of the best CD rates available, especially among short-term CDs, so it's a great first stop if you're looking to lock in a high CD rate before the next drop in a few weeks.

3. A brokerage account or retirement account

Investing is the best way to grow your wealth over the long term. But it's dangerous to invest short-term savings here since the stock market can be volatile. If you invest money you think you'll need in a few months, you risk selling at a loss to get the cash you need. That's why it's best to only invest funds you don't plan to use in the next five to seven years, or longer.

Retirement accounts are a great option for most people because they offer valuable tax breaks. Tax-deferred accounts, like traditional IRAs and 401(k)s, reduce your taxable income today while Roth accounts give you tax-free withdrawals in retirement. However, these accounts have annual contribution limits. Generally, you also can't withdraw money penalty free while under age 59 1/2.

If these limits feel too constraining, a taxable brokerage account is a better option. You're free to contribute as much as you want, invest in whatever you want, and withdraw your cash as needed.

The SoFi Active Investing account is one of our favorite brokerage accounts because it's easy to use and has a lot of zero-commission products,¹ which can save you money on fees. Check out the offer page to sign up for an account today.

SoFi also offers bank accounts, so it's a strong choice for those who hope to manage their money all in one place.

Feel free to spread your cash between several of the account types listed here too. Just make sure to consider the purpose of the money before you decide where you'd like to keep it.