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Where to Put Your Money During a Recession

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Kailey Hagen
Author: Kailey Hagen
Kailey Hagen
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Kailey Hagen has been writing about small businesses and finance for almost 10 years. Articles she's written for The Motley Fool have been syndicated to USA Today, MSN, and Yahoo! Finance. She specializes in personal and business bank accounts and software for small to medium-size businesses. She lives on what's almost a farm in northern Wisconsin with her husband and three dogs.

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Cole Tretheway
Reviewer: Cole Tretheway
Cole Tretheway
Cole Tretheway

Cole Tretheway is a full-time personal finance writer whose articles have been featured on Motley Fool Money and The Motley Fool. He has a degree in English with a Certificate in Professional and Technical Communication from California Polytechnic University, SLO.

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Eric McWhinnie
Fact Checked: Eric McWhinnie
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Eric McWhinnie

Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in Finance.

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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures that our product ratings are not influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice.

It's normal to worry about where to put your money during a recession. A recession is a period of economic decline, and it can wreak havoc on investments.

With so much uncertainty, people may wonder where it is best to keep their money. In the stock market? A savings or money market account? Maybe a certificate of deposit (CD)?

The best place to put your money during a recession depends on your investment goals. We'll compare the pros and cons of different investments so you can decide where to put your money with confidence.

Where to put money during a recession

Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account).

Alternatively, invest in the stock market with a broker.

Stick it in a savings account

Savings accounts are safe places to store money you might need tomorrow. That's important in a recession: You may need support from your savings to pay bills.

All savings accounts earn interest. The amount of interest depends on which account you choose -- so make sure to shop around before settling on one. The best savings accounts offer high APYs (how much you'll earn in a year), up to 10x more than the national average.

Compare savings rates

Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.

Account APY Promotion Next Steps
3.80%
Rate info Circle with letter I in it. 3.80% annual percentage yield as of December 27, 2024. Terms apply.
Min. to earn: $0
N/A
Open Account for American Express® High Yield Savings

On American Express's Secure Website.

up to 4.00%²
Rate info Circle with letter I in it. You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet.
Min. to earn: $0
New customers can earn up to a $300 bonus with qualifying direct deposits!¹
3.80%
Rate info Circle with letter I in it. 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
N/A

Keep in mind that savings accounts APYs can fluctuate. They don't offer fixed interest rates like CDs. And over long periods of time, the stock market tends to offer much higher returns than savings accounts, online and offline.

During a recession, many investors put money in savings accounts to keep money handy and earn interest on savings. Consider investing in a savings account if you're building an emergency fund or prefer stable returns (right now, the top accounts offer rates around 4%-5%).

Pros and cons of putting your money in a savings account

Pros

  • Easy access to funds
  • Open at any bank
  • High APYs through online banks
  • FDIC insured

Cons

  • Low APYs at brick-and-mortar banks
  • Withdrawing funds usually requires transfers
  • APY can drop at any time

Invest in a money market account

Money market accounts combine features of savings and checking accounts. It's easy to access money kept in a money market account, plus they offer interest rates comparable with savings accounts. They may offer debit cards or check-writing capabilities, and like savings accounts, may have withdrawal limits.

The best money market accounts offer a winning combination of high APYs and easy access to your money.

Discover® Money Market
Open Account for Discover® Money Market

On Discover Bank's Secure Website.

Member FDIC.

Ratings Methodology
Rates as of Dec 20, 2024

Discover® Money Market

Open Account for Discover® Money Market

On Discover Bank's Secure Website.

Member FDIC.
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Open Account for Discover® Money Market

On Discover Bank's Secure Website.

Monthly Fee
$0
Min. Balance
$0
APY
3.60%-3.65% Rate info Circle with letter I in it. 3.60% applies to balances under $100K, Need $100,000+ to earn 3.65%
Min. To Earn APY
$0.01-$100,000 for 3.60%; $100,000+ for 3.65%
  • Competitive APY
  • No minimum balance to maintain account
  • No monthly fee
  • Debit card and check availability
  • No minimum deposit required to open
  • FDIC insured
  • Best rate requires at least $100,000
  • No in-person banking/branches

This account offers a competitive APY, especially given there are no monthly service fees, while still giving access to ATMs and checks. You don't need to maintain a high balance to earn a good rate.

Read Full Review

Quontic Money Market Account

Open Account for Quontic Money Market Account

On Quontic's Secure Website.

Member FDIC.
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
 = Best
= Excellent
= Good
= Fair
= Poor
Open Account for Quontic Money Market Account

On Quontic's Secure Website.

Monthly Fee
$0
Min. Balance
$100
APY
4.75%
Min. To Earn APY
$100
  • Competitive APY
  • Debit card and checks available
  • Few fees
  • FDIC insured
  • Difficult to deposit cash

The Quontic Money Market Account offers one of the most competitive APYs around, and its lack of common banking fees helps you keep more of what you earn in your pocket. The account is also pretty flexible when it comes to withdrawing your money, but depositing cash could be a challenge without any branches or deposit-taking ATMs.

Read Full Review

The downside to money market accounts is their minimum balance requirements. You may need a minimum deposit to open the account and/or avoid monthly maintenance fees. That is problematic when you must drain your savings to cover an emergency expense -– you could be charged for doing so.

During a recession, many investors put money in money market accounts to keep money handy and earn higher-than-average bank rates. Consider investing in a money market account if you can afford the down payment and want easy access to most of your savings.

Pros and cons of putting your money in a money market account

Pros

  • Direct access to funds
  • High APYs
  • Open at any bank
  • FDIC insured

Cons

  • Potentially high minimum balance requirements
  • APY can drop at any time

Invest in CDs

A certificate of deposit (CD) is a special type of bank account that offers a high APY. In exchange, you must agree not to withdraw your funds for a set period of time. The amount of time during which you don't withdraw your funds is called the CD term. These terms can be a few months or a few years. If you withdraw funds early, you typically pay a penalty.

The best CD rates are sometimes higher than the best savings account APYs. Additionally, most CDs lock in your APY. That's useful when APYs are falling (as they sometimes do during recessions). A CD is a stable option that earns you consistent returns.

Rates as of Dec. 18, 2024
Bank & CD Offer APY Term Min. Deposit Next Steps
APY: 4.00% Term: 1 Year Min. Deposit:  $0
Open Account for Discover® Bank CD

On Discover Bank's Secure Website.

Member FDIC.
APY: 4.25% Term: 10 Months Min. Deposit:  $2,500
Open Account for

On Secure Website.

Member FDIC.
APY: 4.25% Term: 6 Months Min. Deposit:  $500
Open Account for

On Secure Website.

When you invest in a CD while rates are high, you'll keep your higher rate regardless of nationally-falling rates. However, if rates start to rise, you could get stuck with lower rates.

During a recession, many investors put money in CDs to lock in rates or earn stable returns. Consider investing in a CD if you are comfortable with the interest rates and have no plans to withdraw the money before the term is up.

Pros and cons of putting your money in a CD

Pros

  • Lock in your APY while rates are falling
  • Earn high APYs on longer CD terms
  • Open at any bank
  • FDIC insured

Cons

  • Limited access to funds
  • APY locked in even when rates rise

Invest in the stock market

You could make a lot more money by investing in the stock market, but the stock market can be volatile, especially during recessions. New investors should consider what to invest in during a recession.

The advantage of investing in stocks during a recession is that you can often buy at a discount. Stock prices tend to fall before and during a recession, then gradually recover. You can pay a lower price than usual for quality investments and benefit when the stock market rebounds.

You're technically free to cash out your investments whenever. However, it's best to only put money in the stock market if you don't plan to use it anytime soon. You don't want to invest cash you might need at a moment's notice. If you're in a tight spot, you might need to sell at a loss.

During a recession, many investors put money in stocks to earn high long-term returns. Consider investing in stocks if you don't need the money for emergency payments and are tolerant of risk -- in this case, losing money to poorly-performing companies.

Pros and cons of putting your money in the stock market

Pros

  • Large returns possible
  • Variety of investment options
  • Cash out whenever

Cons

  • Risk of loss
  • Can be intimidating for beginners

FAQs

  • Consider putting money you might need tomorrow in a savings or money market account. For longer-term investments, you can put cash in certificates of deposit (CDs) or the stock market. There are advantages to each -- do a little research before you plant your seeds of growth.

    An emergency fund is a great hedge against unexpected costs. Consider putting three to six months of income in a high-yield savings account so you can withdraw the money when you need it most.

  • Depends on your investment horizon. Long-term investors with diversified portfolios may want to park their cash in a mix of savings, CDs, ETFs, and stocks. A diversified portfolio protects you against losses and maximizes the chance you'll earn a return on investment. It's worth noting that a recession typically drops the sticker price of many assets, including housing prices.

  • Probably not. You can withdraw savings to pay bills or reinvest as normal, but banks are somewhat recession-proof. Keep in mind, many banks are FDIC insured: your deposits are protected up to $250,000 per depositor, per bank. So even if your bank fails during a recession, the U.S. government has your back.