You Can Earn 9 Times More Interest Just by Making One Change to How You Save Money

By switching to a savings account that pays a high interest rate, you can earn free money in your sleep. Look for an account paying an APY of at least 2 percent


Welcome to Day 12 of our 30-Day Easy Money Makeover! Every day in April, we're bringing you strategies to help you improve, and feel more confident about, your money situation. Follow along and see the rest of the calendar here .

There’s the dream about making money in your sleep, and then there’s the reality for most of us: We spend our waking hours slogging through the daily grind to make ends meet.

After raising interest rates the past few years, the Federal Reserve likely will hold rates steady this year. That’s good news for consumers who have borrowed money or will be looking to soon. But the downside is that savers won’t see rate boosts on their checking or savings accounts, either.

That said, it’s still easy to make some extra cash by opening an account that pays a higher annual percentage yield (APY, or the amount of money you earn in one year).

While the national average APY for a savings account is just 0.27%, top accounts currently offer average rates slightly higher than 2%, according to Money market accounts, which are similar to savings accounts, may offer even higher rates but with the caveat of higher minimum deposit or balance requirements.

You want to park your money in an account that pays an attractive rate because it’s free money that can really add up over time. Say you have $500 to deposit, in one year you’ll earn about $10 in interest versus just $1.35 for one of those average accounts. That may not wow you, but after five years, you’ll earn more than $45 extra by investing in a 2% APY account.

More than a dozen online savings accounts currently offer APY rates of 2.1% to 2.45%, according to, and a 2% APY is the benchmark you should be earning right now, says Matthew Goldberg, a analyst.

“Every day you’re in a zero-point-nothing APY account, you’re costing yourself money, especially when these 2% APY accounts are so readily available,” Goldberg says.

Here’s how to start earning more money today:

Track down great rates

An easy place to start is by researching rates for savings or money market accounts at your current bank, online broker, or credit card issuer. This is a good option if you prefer simplicity and don’t want accounts with multiple financial institutions.

The downside is you may not get the highest rates available. If you don’t find anything compelling with those banks you currently do business with, a number of websites (including and Bankrate) compile current rates for both savings accounts and money market accounts. The highest rates are most likely at online banks, meaning you won’t have access to a physical branch, but banking online is easy and safe.

If this is your first foray into online banking, it’s a good idea to think about what money in this account is earmarked for, be it an emergency fund, a vacation, or something else, Goldberg says. Distance can be a good thing.

“Sometimes it’s good not to have that savings account down the street at the bank,” he adds. “That might help you out if you’re really trying to save money.”

Pay attention to terms

Like any financial decision, you need to pay attention to the small print. Many online banks have minimum investment requirements that can be pretty hefty (up to $25,000)—and if you don’t meet that requirement, you won’t earn that attractive interest rate.

Be vigilant about any other stipulations that could prevent you from earning that top interest rate. Some banks require monthly deposits, while others charge monthly fees, limit access to ATMs, or restrict the number of withdrawals you can make each month, for example.

Look for an account with a minimum balance you’re comfortable maintaining, so you’ll avoid paying any maintenance fees but can also tap the money when you need it, Goldberg advises.

“Try to have a plan for how you’re going to access the money in this account,” he says.

Make your move

Once you’ve decided on which bank you want to open an account with, you can generally sign up for an account in about 15 minutes. You’ll need some basic information to open the account, including your date of birth, Social Security number, address, phone number, and details on how you’ll fund the account.

And that’s it. The dream of making money in your sleep has (finally) come true.

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