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43% of Investors Have at Least One Cannabis-Related Stock or Fund, With Users 4 Times As Likely to Invest

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It may not have not been reviewed, commissioned or otherwise endorsed by any of our network partners or the Investment company.

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With support for cannabis legalization at an all-time high in the U.S., it shouldn’t come as a surprise that more people are investing in cannabis-related stocks. The latest MagnifyMoney survey of more than 1,200 investors found 43% currently invest in the cannabis industry.

And given the majority of those investors got involved in 2020 or 2021, it’s not unreasonable to imagine more investors joining them soon.

Key findings

  • Cannabis-related investments are becoming widespread. 43% of investors currently hold at least one cannabis-related stock, whether it’s an individual stock, mutual fund or exchange-traded fund (ETF).
  • Most cannabis investors recently put money in a related stock or fund. More than a third (34%) said they did in the past week, with an additional 33% in the last month. Separately, 60% expect to invest more money in cannabis in the next six months.
  • Cannabis consumers are more likely to invest in those stocks. 65% of investors who use cannabis invest in related stocks, while only 16% of investors who don’t use cannabis invest in the industry.
  • Those not investing in cannabis may be more willing to do so should its consumption become legal at the federal level. 53% of those not investing in cannabis said they’d consider doing so at that point.
  • More people expect to get rich off cannabis investments than those who think they’ll get rich by investing in cryptocurrency. 75% of cannabis investors said they believe they’ll get rich because of those investments, compared with 62% of crypto investors who said the same about related investments.
  • Cannabis investors aren’t in it for the short term, but they also don’t expect to hold their investments forever. Most cannabis investors expect to hold on to their current cannabis investments for one to three years (48%) or four to six years (26%). Just 8% expect to do so for 10-plus years.

Cannabis use stagnates, but investors’ circle expands

Despite the percentage of Americans who report smoking marijuana remaining relatively flat over the past few years, according to Gallup, a large share of investors are now buying cannabis-related stocks. In fact, 43% of investors hold some form of stake in cannabis.

Plus, most of those investors (66%) have bought shares of individual cannabis stocks instead of ETFs or mutual funds that include cannabis. And investors see potential for the industry, citing long-term growth predictions and high demand as two of the most common reasons for investing.

Given the large share of respondents who invested in cannabis for the first time just last year, that pool is likely to expand. Of those with investments, 40% made their first cannabis-related stock purchase in 2020 — and another 23% in 2019. With 20% of investors having started to experiment with cannabis stocks in the first half of 2021, it’s feasible even more will be betting on green by the end of the year.

Further, many cannabis investors invested as recently as a week before the survey. 34% of investors put money in cannabis-related stocks within the last week, with another 33% reporting investing in the last month. What’s more, 60% of cannabis investors plan on investing more money over the next six months.

Where there’s smoke, there’s investment

Based on the survey’s findings, it’s possible cannabis use may lead to cannabis investing. More than three-quarters (78%) of investors who report using cannabis have invested in the industry at some point, with 65% currently holding investments.

Pro tip: “Investing in products and companies you use can give some insights into the prospects of a stock, but it’s only one factor and certainly not a guarantee of positive returns,” LendingTree chief economist Tendayi Kapfidze says.

As for those who aren’t investing in cannabis, personal opinions typically aren’t what’s stopping them. More than 4 in 10 (41%) non-investors haven’t thought about buying cannabis stocks. Another 25% of those who haven’t invested say a lack of market knowledge — like which stocks or funds to buy into — might be stopping them.

Additionally, the end of federal cannabis prohibition could spur a new wave of cannabis investors. Under federal law, cannabis possession for medical or recreational use is still strictly prohibited. That doesn’t mean you’ll be arrested for investing in cannabis stocks, but the growth of the overall cannabis market continues to meet obstacles due to prohibition, even as it’s legalized in various states across the U.S.

Perhaps due to an understanding of those hurdles, 53% of those currently not invested in cannabis stocks would consider investing if the plant became federally legal.

“Legalization could lead to a larger market as more people use cannabis and research leads to more use cases,” Kapfidze says. “Previously, investment in this space meant engaging in illegal activity at significant personal risk.”

Cannabis investments more popular with young investors but bigger from older investors

Younger investors appear to be more interested in cannabis-related assets. More than half of each of the two youngest generations of investors surveyed report investing in cannabis stocks — 62% of Gen Zers (ages 18 to 24) and 54% of millennials (ages 25 to 40).

A significant number — 47% — of Gen X (ages 41 to 55) investors have also gone in on ganja, still much more frequently than the 16% of baby boomers (ages 56 to 75).

But while it is a small pool of baby boomer investors, their investments are more likely to outsize the younger folks. The majority of investors in each generation (except baby boomers) report investing less than $500. More than half (53%) of boomer investors have contributed more than $500, with 38% reporting investing more than $1,000. Overall, less than a quarter (24%) of investors have surpassed that threshold.

The older generations are also more likely to invest in companies focused on medical cannabis rather than recreational use. While Gen Zers and millennials distribute their investments close to evenly between medical and recreational cannabis companies, older generations show a clear preference. Baby boomers are four times as likely and Gen Xers are twice as likely to invest in medical cannabis versus recreational cannabis companies.

Investors are confident cannabis investments will deliver high returns

With legalization expanding across more states, it’s understandable that some investors predict significant financial gains in the future. Of those currently invested in cannabis stocks, 75% find it at least somewhat likely that they’ll get rich off their investments:

  • Extremely likely: 43%
  • Somewhat likely: 32%
  • Somewhat unlikely: 18%
  • Extremely unlikely: 7%

Like other investing trends like cryptocurrency or nonfungible tokens (NFTs), uncertainty about future use, acceptance and legitimacy might be keeping investors hopeful — while deterring naysayers. The three-quarters of investors who think they’ll get rich on cannabis stocks show more faith than the 62% of cryptocurrency investors who believe crypto is their road to riches.

Nevertheless, cannabis investors don’t generally expect that wealth to manifest overnight. Almost half (48%) of investors expect to hold their investments for one to three years, with another 26% planning to hold for four to six years. Just 8% of investors are currently expecting to hold their assets for more than 10 years — perhaps hoping that they will make their expected returns within the next decade.

Light up your portfolio

Whether you’re looking to invest in cannabis stocks or just looking to grow your investment portfolio, use these tips to get started:

  • Find a financial advisor. Especially helpful for high-earners, a financial advisor can help you make informed investment decisions and minimize tax liability.
  • Use a robo-advisor.Robo-advisors use algorithms to automate your investing strategy, which can make them a great option for beginners.
  • Do your homework. Before you invest in any company, you’ll want to do some research to determine if it may be a good investment and perhaps whether it aligns with your values.

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,233 U.S. consumers with an investment account from May 3-6, 2021. The survey was administered using a non-probability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.

We defined generations as the following ages in 2021:

  • Generation Z: 18 to 24
  • Millennial: 25 to 40
  • Generation X: 41 to 55
  • Baby boomer: 56 to 75

While the survey also included consumers from the silent generation (defined as those 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.

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Banking

10 Best Savings Accounts in June 2021

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

A savings account is a key component of everyone’s financial life, but not everyone needs the same thing from their savings account. We’ve outlined the best savings accounts in several categories to help you find the right one for your preferences, whether that’s earning a high interest rate, dodging fees or getting great customer service.

To identify the best savings accounts, we looked for accounts with high yields, few fees and low to no balance minimums. We regularly check rates and accounts at over 200 banks and credit unions to stay on top of the latest offerings. Read on for details on the best savings accounts.

The Best Savings Accounts in June 2021

Best for

Institution

Best overall

Axos Bank High Yield Savings

Best for high APY


Affirm Savings

Best for mobile app


Chime Savings Account

Best bonus offer


Regions Bank LifeGreen Savings

Best for combined savings and checking


Varo Savings Account

Best for avoiding fees


Discover Online Savings Account

Best for customer service


Ally Bank Online Savings Account

Best for branch access


Chase Savings

Best for transferring funds


Marcus by Goldman Sachs High Yield Online Savings

Best credit union savings account


Blue Federal Credit Union Sky High Savings

Looking for more rates? Check out our partners below!

Best savings accounts

Best overall savings account: Axos Bank High Yield Savings — 0.61% APY

High Yield Savings from Axos Bank

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on Axos Bank’s secure website

Member FDIC

Launched in 2000 as Bank of Internet USA, Axos Bank is an online-only bank that offers a standout savings account. Axos Bank’s High Yield Savings account earns a competitive 0.61% APY on balances below $25,000, and it charges no monthly maintenance fees. You can also get a free ATM card upon request — a rare perk for a savings account — though typical savings account withdrawal limits do apply.

Although you’ll need to make a minimum deposit of $250 to open an account, there are no monthly minimum balance requirements beyond that. You can easily manage your account online or through the Axos Bank mobile app. Customer service is available 24/7 through a virtual bank teller or by phone.

How we picked our best overall savings account: Our selection for the best overall savings account had to meet all of the requirements as the other accounts that made our list: having a consistently competitive APY; having minimal balance and deposit requirements as well as account fees; and being FDIC-insured. However, to rank as best overall, the account also had to meet the following requirements:

  • An APY that exceeds the current national average APY for savings accounts per the FDIC
  • No conditions necessary to meet advertised APY
  • No monthly fee charges
  • A mobile app
  • Offers online banking
  • Provides 24/7 customer support service
  • Also an option for a checking account at the bank

Best for high APY: Affirm Savings account

Affirm Savings from Affirm

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on Affirm’s secure website

Member FDIC

Although Affirm might be better known for being an online payment option for shopping, it is currently offering one of the best savings account rates on the market. In addition to offering a high 0.65% APY on all balances, the Affirm savings account has no minimum requirement to open and no fees. There’s also a mobile app for managing your account.

This account is held by Cross River Bank, which also provides FDIC insurance up to the legal limits.

Best for mobile app: Chime Savings Account — 0.50% APY

Chime Savings Account from Chime

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on Chime’s secure website

Member FDIC

As of this writing, the Chime Mobile Banking app has a 4.7 average star rating between the more than 500,000 reviews in the Google Play Store and Apple App Store. The app offers several stellar banking features, including the ability to connect your external accounts to facilitate easy transfers and provide a holistic financial picture in one place. The Chime app also sends transaction and balance alerts so you can stay on top of your account. If you notice any unauthorized spending, you can block transactions and turn off international transactions on your card right from the app. The Chime app also has mobile check deposit capabilities, and it allows you to send paper checks in the app as well.

The Chime Savings Account itself is a solid choice with 0.50% APY on all balances, no minimum balance requirement, no maximums on interest earned and no fees. You’ll need a Chime Spending Account to add on the savings account, a relationship that allows easy automatic savings transfers. The Chime Savings Account also saves your change on purchases with its Round Ups feature, and it stashes away a percentage of each paycheck with the Save When I Get Paid feature.

Chime is a fintech company, not a bank itself, so its banking services and FDIC insurance are provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC.

Best bonus offer: Regions Bank LifeGreen Savings — 0.01% APY

LifeGreen Savings account from Regions Bank

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on Regions Bank’s secure website

Unlike most bonus offers that are one-and-done, the Regions LifeGreen Savings account earns an annual 1% saving bonus up to $100. All you need to do to earn it is receive an automatic transfer of funds of at least $10 from a Regions checking account to your LifeGreen Savings account in at least 10 of the calendar months in the year before your account opening anniversary. The 1% bonus is based on your average monthly balance for each year.

Even better, the LifeGreen Savings account doesn’t charge a monthly fee and doesn’t have any minimum balance requirements. Regions Bank has branches across 15 states and is accessible online and on mobile. It’s also compatible with several mobile wallets and Zelle.

Best for combined savings and checking: Varo Savings Account — 3.00% APY

Varo Savings Account from Varo

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on Varo’s secure website

Member FDIC

Varo makes it easy to open its checking and savings accounts in one go. You simply need to download the app, go through the Varo Bank Account application and add your Varo Savings Account. Neither account has a minimum deposit requirement, and there’s no monthly fee.

The Savings Account requires just $0.01 to start earning interest. The standard rate is 0% APY. However, you can boost your rate to an industry-leading 3.00% by making at least five qualifying purchases with your Varo Bank Visa Debit Card and receiving qualifying direct deposits totaling at least $1,000 each month.

Thanks to the seamless connection between the two Varo accounts, you can use Varo’s automatic savings tools for more efficient savings. Save Your Pay automatically transfers a percentage (of your choosing) of your Varo Bank Account direct deposits to your Savings Account. Another offering, Save Your Change, rounds up every transaction to the nearest dollar and then transfers that amount to your savings account.

Best for avoiding fees: Discover Online Savings Account — 0.40% APY

With Discover Bank, you can avoid fees on items like monthly maintenance, checks, incoming wire transfers, returned deposited items, excessive withdrawals and insufficient funds. The only service charge you’ll run into is a $30 fee to send a wire transfer.

No fees means your Discover Online Savings Account gets to earn 0.40% APY undisturbed. There’s no minimum balance required to earn interest, nor is there a minimum deposit needed to open the account. You can access your accounts solely online, including through the mobile app available in the Apple App Store and Google Play. The mobile app also offers check deposit.

Known for its credit cards, Discover’s first card was used in 1985. That same year, Discover acquired Greenwood Trust Company, which officially changed its name to Discover Bank in 2000.

Best for customer service: Ally Bank — 0.50% APY

Online Savings Account from Ally Bank

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on Ally Bank’s secure website

Member FDIC

Ally Bank offers 24/7 phone customer service, a great perk for banking customers everywhere. The bank even provides a wait-time estimate on its website. In addition to constant phone support, you can reach bank representatives over secure messages within your account, through mail and via online live chat.

Making the bank’s accessible customer service even better is the fact that its Online Savings Account is a constant top competitor, currently earning 0.50% on all balances. There’s no monthly fee for the account, and Ally Bank is transparent about the fees it does charge, which include outgoing domestic wires, paid overdraft items and excessive transactions.

Tracing its history back to 1919 as the financing division of GM, Ally Bank offers an extensive and helpful mobile app that allows you to make deposits, pay your bills, transfer money, find in-network ATMs and view your balances and transactions. You can download the app on various platforms including Android, iOS and Windows.

Best for branch access: Chase Savings — 0.01% APY

Chase Savings from Chase Bank

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on Chase Bank’s secure website

Member FDIC

Of the big traditional brick-and-mortar banks, Chase Bank has the widest reach, with branches and ATMs in 39 states and the District of Columbia. Additionally, Chase accounts are easily accessible online and through the bank’s mobile app.

The Chase Savings account charges a $5 monthly fee, although you can waive it in a few ways — this includes keeping a $300 minimum daily balance, receiving automatic transfers of at least $25 from a Chase checking account or linking your account to a qualifying Chase checking account. There’s also a $5 fee for any transactions made from the savings account beyond the six-transaction limit per statement cycle. All balances earn interest, although at an unimpressive 0.01% APY.

Best for transferring funds: Marcus by Goldman Sachs Online Savings Account — 0.50% APY

High-yield Online Savings Account from Marcus by Goldman Sachs

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on Marcus By Goldman Sachs’s secure website

Member FDIC

Marcus by Goldman Sachs, an online-only banking option, allows customers to make free electronic Automated Clearing House (ACH) transfers in and out of the account. It also has one of the most generous policies on amount limits: ACH withdrawals max out at $125,000, and there’s no limit for deposits (as long as you cap your account balance at $1 million). You can even call the bank if you want to make withdrawals above these limits. Wire transfers to and from the account are also free.

The Online Savings Account is free to own and earns a 0.50% APY on all balances. You can open the account with any amount, and don’t have to worry about maintaining a minimum balance either.

Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA. Marcus is accessible online and on its mobile app, which is available in both the Apple App Store and Google Play Store (although some features are available for iOS devices only).

Best credit union savings account: Blue Federal Credit Union Sky High Savings — 0.45% APY

Sky High Savings from Blue Federal Credit Union

SEE DETAILS Secured

on Blue Federal Credit Union’s secure website

NCUA Insured

The Blue Federal Sky High Savings earns its 0.45% APY on all balances. There’s no minimum or maximum balance requirement to own the account, nor is there a monthly fee.

Blue Federal Credit Union is accessible in person, through its 24/7 call center, online and on mobile. The credit union formed in 2016 as a result of a merger between a Wyoming credit union and a Colorado-based credit union. As a result, Blue Federal Credit Union has locations in Colorado and Wyoming, and thousands more CO-OP Shared Branches around the country.

Membership eligibility is based on family or employer connections. However, even without those ins, you can join through a donation to the Blue Foundation, which the credit union will fund for you.

Methodology

To find the best savings accounts, MagnifyMoney looks at over 200 financial institutions each week, from small community banks and credit unions to traditional brick-and-mortar banks to new online banks. Specifically, we consider the following factors when making our selections:

  • Savings account annual percentage yield (APY): We heavily weighted the APYs offered by each bank in terms of both magnitude and consistency. Higher savings account interest rates were prioritized over lower rates. Due to the variable rates on savings accounts, we also gave additional consideration to banks that were known to maintain a competitive APY over longer periods of time.
  • Minimum deposit and balance requirements: To ensure accessibility to all customers, we focused on banks that welcome deposits of all sizes, where the ideal banks in this category have minimum balance and deposit requirements of $0.
  • Bank account fees: Unnecessary fees can eat into your long-term savings in a major way. As such, we gave priority to banks that offer low or no fees, including account maintenance fees, service charges and other surcharges. If accounts had the same APY and minimum requirements, we went with the account with lower fees.
  • FDIC-insured: It’s crucial for your deposit accounts to be protected by FDIC insurance in the case your financial institution were to fail. As such, we only included FDIC-insured savings accounts on our list.

Savings account FAQ

A savings account is a type of deposit account where you can stash money for any length of time, long or short. Banks and credit unions reward you with an attractive return on your savings balance — thanks to the magic of compound interest, your savings can grow steadily over time. Keep in mind that unlike checking accounts, savings accounts aren’t designed to handle frequent transactions. Due to the Federal Reserve’s Regulation D, you are (mostly) limited to six savings account transactions — deposits, withdrawals or transfers — per month.

While savings accounts give customers a safe place to stash their money, they serve a different purpose for financial institutions. Banks and credit unions use their customers’ deposits to fund loans and other products. Banks charge borrowers interest on loans, which funds in part the interest you earn on your savings deposits. So when you open and fund a savings account, you’re helping your bank fund its business.

The money you place into a savings account at a bank is generally protected by FDIC insurance, up to the legal limit of $250,000. This limit applies per person, per bank, per ownership category.

For example, you would receive full FDIC coverage of a $250,000 deposit made to a savings account at ABC Bank, and you would get full FDIC insurance on $250,000 deposited in a savings account with XYZ bank.

If ABC Bank went under, you wouldn’t lose a dime of your deposit. The FDIC would either set you up with a new account at another FDIC-insured bank for the same amount as the closed account, or send you a check for the balance. However, if you had a $50,000 checking balance and a $250,000 savings account balance with ABC Bank, you would only receive $250,000 in total FDIC insurance for your accounts — with a potential loss of $50,000.

Credit unions rely on National Credit Union Administration (NCUA) insurance. The NCUA is an independent agency that maintains the National Credit Union Share Insurance Fund (NCUSIF), which funds deposit insurance payouts. All federal credit unions are insured by the NCUA. State-chartered credit unions are regulated by the state supervisory authority where the credit union’s main office is located, but they may also have NCUA insurance.

Money kept in a savings account is best left alone unless you absolutely need it. To maximize the return on your savings, stash most of your liquid cash flow in a savings account, and only keep the funds you need for day-to-day spending in your checking account. That allows your money to grow more efficiently — more money in a savings account means more interest earned and compounded.

How easy it is to move money in and out of your savings account depends on your financial institution. Typically, a transfer between deposit accounts goes through Automated Clearing House (ACH). ACH transfers should only take one to two business days to clear, often clearing immediately or within one business day. Some institutions, however, may take the full two days, depending on their own rules and regulations.

Keep in mind that savings accounts have a limit of up to six certain transfers or withdrawals per month, thanks to the Federal Reserve’s Regulation D, or Reg D. This limit only applies to “convenient” transfers and withdrawals made by “preauthorized, automatic, telephonic agreement, order or instruction, or by check, debit card or similar order made by the depositor and payable to third parties.” Less convenient transactions are exempt from this regulation, including withdrawals or transfers made in person at the bank or ATM, by mail or over the phone.

Making more than six transactions per cycle will often result in an excessive transaction fee depending on the financial institution. Exceeding the limit several times can lead to the bank closing your account for good.

It’s safe to say that everyone should have a savings account. If your money’s going to sit in a bank account, it might as well earn interest while it’s there. And if you’re going to earn interest, it’s surely best to find an account that earns the most interest possible — namely a high-yield savings account.

Even if you’re not interested in chasing the highest possible interest rate, you should still have a savings account to keep your money safe. Some people don’t trust banks and stash cash under their mattresses. But what happens if your house burns down or there’s a break-in? Stolen or lost funds are gone for good. Meanwhile, money in a savings account is kept safe by the FDIC, which even offers bank skeptics peace of mind as it ensures you’ll get your money back no matter what.

If you’re not sure which account to choose, consider your savings priorities first. If you’re trying to reach a savings goal, a high-yield savings account will help you reach your goal faster than a lower-rate account.

Perhaps you want an account where you don’t have to worry about fees. There are several fee-free savings accounts and accounts that don’t charge for excessive withdrawals that would be perfect for your needs.

Generally, though, these two features should be your top priorities when applying for a savings account. A high-yield savings account grows your money more efficiently, and minimizing fees helps you keep it.

If you’re looking at interest rates, there’s not much difference between the average savings accounts offered by banks and credit unions. In December 2020, the average savings account rate from brick-and-mortar banks earned just 0.06% APY, while credit unions had an average APY of 0.25%. But that doesn’t mean you won’t find competitive rates at banks or credit unions — it simply means you’ll need to shop around

The same goes with fees. A 2018 MagnifyMoney survey of 57 rewards checking accounts from banks and credit unions indicated that credit unions tend to charge slightly higher fees than their traditional bank counterparts. However, credit unions are nonprofits, and tend to charge fairer fees than big banks do.

For many people, the choice of bank or credit union is a matter of personal preference. When you join a credit union, it means that you own a piece of the institution along with its other members. With a credit union, there’s more transparency about how your deposits are being used — many people prefer to know that they are funding loans and helping other members, as opposed to paying big executive paychecks.

When it comes to physical access, banks usually have credit unions beat. Big banks have the money to spread their branches throughout the country, while credit unions tend to serve specific communities and locations. Still, credit unions very often partner with other credit unions and ATM networks to provide their members with widespread ATM access. Note that the CO-OP Financial Services credit union service organization has the second largest branch network in the United States.

A high-yield savings account is an easy way to boost your savings without any extra effort on your part. Let’s say you have $5,000 in a 0.01% APY savings account, which is a typical rate from traditional, big banks. Assuming you don’t make any additional contributions, in a year, you’d earn a whopping 50 cents in interest. That’s a pretty poor rate.

Switching that $5,000 deposit over to a high-yield savings account that earns 0.65% APY would yield $32 and change in interest annually — that’s definitely a sight better than 50 cents. Additional recurring deposits, perhaps monthly, would increase your savings even more. Setting up automatic recurring deposits is an easy way to turbocharge your savings.

Many deposit accounts charge a monthly maintenance fee, with the exception of online accounts, which seldom charge a monthly fee. The exact fee amount of a monthly fee depends on the bank and the specific account, but they can range anywhere from $5 to $15 a month. The good news is that there’s almost always a way to waive the fee. Typically, this means maintaining a minimum monthly balance or making a certain number of transactions per month.

Banks also often charge for returned deposits, overdrafts, excessive transactions, expedited delivery or transfers, incoming and outgoing wire transfers and paper statements. But if you avoid these items, you’ll skip the fees.

Many of the best savings accounts are available online. By operating only over the internet, banks are able to save on the cost of owning and maintaining physical branches. Banks pass those savings onto their customers in the form of the high rates you see above.

But just because they’re online doesn’t mean they’re any less secure than a well-known bricks-and-mortar bank. Reputable online banks offer FDIC insurance on your balances up to the legal limit. If you’re unsure, you can use the FDIC’s BankFind tool to check a bank’s insurance status.

As for online security, most banks employ the same security features as the big banks, if not more. This includes network and browser encryption, firewalls, anti-virus scanning and anti-malware protection. Banks may also offer additional safety features like two-step authentication, automatic logout, fingerprint identification and proactive account monitoring. You can always check a bank’s exact safety features on its website, which applies to both online-only and brick-and-mortar banks.

You sure can. If you have a lot of cash on hand, opening multiple savings accounts can allow you to maximize your FDIC insurance. Think of the scenario mentioned above: Keep $250,000 in an ABC Bank savings account and $250,000 in an XYZ savings account. Dropping the total $500,000 in a single ABC Bank savings account would leave $250,000 uninsured.

Opening more than one savings account may also help you keep track of separate savings goals. For example, you can use one savings account to house your emergency fund, which you never touch except for in dire circumstances. Keeping your emergency fund separate from your other accounts may make it easier for you to avoid dipping into it.

If you do have more than one savings account, just make sure they all earn at competitive rates.

Unlike certificates of deposit, savings accounts have variable rates. This means that the bank can decrease or increase their rate at any point, often without notice. However, you can typically expect rate changes to happen on or right after the start of a month.

Deposit account rates often track the federal funds rate, which is set by the Federal Reserve. The federal funds rate establishes the rate banks and other financial institutions charge each other for lending. So when the federal funds rate is cut, banks tend to cut their own rates in response. This includes not only deposit rates, but loan rates as well. Conversely, banks boost their interest rates when the Fed raises the federal funds rate.

Keep an eye on the Federal Reserve’s regular meetings to get a better sense of where the federal funds rate — and therefore your deposit rates — are headed.

If you earn $10 or more in interest in a year, then yes, your savings interest is taxable. Your bank or financial institution will send you a 1099-INT form documenting the interest you’ve earned. Using that form, you include your interest earnings with your annual tax filing. The bank will also send a copy of your 1099-INT form to the IRS.

Even if you don’t receive a 1099 from your bank, you’ll still need to report interest earned on your tax return. Plus, if you earned more than $1,500 in interest in a year, you’ll need to list out the sources of all that interest income on Schedule B of the 1040 Form.

Your earned interest is taxed according to your marginal tax bracket. If you earned $50 in interest and you’re in the 22% tax bracket, you’ll pay $12 in taxes on that interest earned.

Having a savings account is a crucial part of your financial life, but there are other types of deposit accounts that you can (and perhaps should) fit in, such as:

  • Certificates of deposit: A certificate of deposit (CD) is a time deposit. Unlike savings accounts, which have no expiration date, CDs operate according to defined terms. Typically, CD terms range between three and 60 months, although some institutions offer terms beyond these parameters. Once you make your initial deposit, you have to wait for the term to expire — or mature — to access your funds and interest earnings.CDs are a solid savings alternative for those who have already maxed out their other savings accounts. They’re also good for longer-term savings goals. Opening a longer CD lets you lock in a high rate for the length of the term and not have to deal with the rate fluctuations that come with regular savings accounts.CDs often require a minimum deposit to open, often ranging between $500 and $10,000 — any deposits larger than that are often considered jumbo CDs. However, there typically aren’t monthly fees to worry about with a CD. That being said, withdrawing money from a CD before maturity will result in an early withdrawal penalty. Some banks may offer no-penalty CDs, which tend to have shorter terms, that allow you to avoid the penalty.
  • Money market accounts: A money market account more closely resembles a savings account. It earns interest without an expiration date and limits your outgoing transactions to six per cycle. However, money market accounts can also include some checking account features like a debit card and the ability to write checks. This makes them a good alternative if you plan to dip into the account a bit more regularly, rather than using it only for emergencies.Money market accounts tend to earn at higher interest rates than regular savings accounts. However, they also tend to require higher balances to open and then earn interest. Money markets often charge monthly fees, as well, even when they’re online.
  • Checking accounts: Checking and savings accounts are the bread and butter of your financial life. While savings accounts are meant for stashing your money away, checking accounts are designed to help you move through the world, making payments, sending transfers, getting cash and more.That doesn’t mean that your checking account can’t earn interest, too, however. Maximize your savings by opening a high-yield checking account to match your high-yield savings account. Checking accounts don’t earn at rates as high as savings accounts, but that way, all your money in all your accounts can grow at the same time. For more efficiency, consider keeping the majority of your funds in your savings account for better growth — then you can transfer funds over to your checking account as needed.

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The Best 3-Month CD Rates in June 2021

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If you have some extra cash and are looking for a quick return, a 3-month certificate of deposit (CD) could be the handy savings tool you’ve been looking for. CDs with a 3-month term are typically the shortest CD offerings available. Because they’re such brief investments, 3-month CDs also tend to earn at pretty low interest rates. In fact, the average return on a 3-month CD in June is only 0.14% APY.

However, low 3-month CD rates are far from being an inescapable destiny. In order to compete for customers, some banks end up offering really great rates on short-term CDs. This competition can be a big advantage if you know where to look. And we know where to look: Read on to see the best CD rates for 3-month terms.

We ranked the following products by highest APY available nationwide, using data from DepositAccounts.com, another LendingTree-owned company. We also took minimum deposit requirements into consideration to ensure wider availability for customers. Finally, we checked each account’s early withdrawal penalty, as 3-month CD penalties can take a larger chunk of your earnings out than other terms.

The best 3-month CD rates

1. Spectrum Credit Union — 0.50% APY, $500 minimum deposit

Spectrum Credit Union offers a high-yield rate with its 3-month share certificate, which requires a $500 minimum deposit. After that, all balances can earn at the given rate. Making an early withdrawal from the 3-month share certificate will result in a penalty of three months’ worth of dividends.

Spectrum Credit Union was founded in 1973 as Bechtel Employees Federal Credit Union. In 2012, it became a division of Chevron Federal Credit Union (CFCU), aiming to serve communities that Chevron’s membership does not reach. Spectrum membership is available to a variety of customers, including employees of select companies and residents of select San Francisco and Maryland neighborhoods. You can also become eligible by joining one of its partner nonprofit associations.

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on Spectrum Credit Union’s secure website

NCUA Insured

2. NexBank — 0.50% APY, $10,000 minimum deposit

NexBank certificates of deposit earn at some great rates, including its 3-month CD. NexBank requires a pretty high opening deposit of $10,000 for its CDs, and balances max out at $240,000. The penalty for an early withdrawal will equal one month’s worth of interest.

In addition to its CDs and other personal deposit accounts, NexBank focuses largely on commercial banking, mortgage banking and institutional services. It was established in 1934 and is based in Dallas.

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on NexBank’s secure website

Member FDIC

3. Bethpage Federal Credit Union — 0.40% APY, $50 minimum deposit

With competitive rates on all its Certificates, the Bethpage Federal Credit Union 3-Month Certificate is no exception. Plus, you only need $50 to open an account, so it’s easier to get started. The penalty for an early withdrawal from this account is 90 days’ worth of dividends on the principal amount withdrawn.

Bethpage FCU first opened in 1941 to serve Grumman employees. Based in Bethpage, N.Y., the credit union also offers customers access to thousands more branches and ATMs throughout the country through the CO-OP Network. Bethpage FCU opens membership up to anyone; you just need to open a Bethpage savings account and fund it with $5 to become a member.

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on Bethpage Federal Credit Union’s secure website

NCUA Insured

4. Service Credit Union — 0.40% APY, $500 minimum deposit

Dividends are compounded monthly on this 3-month CD from Service Credit Union and credited every month. At the end of the term, you can take out your funds or roll them over. The minimum to open an account is $500.

Service Credit Union was originally formed in 1957 to provide financial services to military members and their families. Active military and veterans are still welcome to join, as are community members of select Massachusetts areas. If you don’t fall under these categories, you can also join Service Credit Union through the American Consumer Council. Use the code “Service” to score a membership at no cost.

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on Lake Michigan Credit Union’s secure website

NCUA Insured

5. Consumers Credit Union (IL) — 0.35% APY, $250 minimum deposit

It takes only $250 to earn this competitive rate on Consumers Credit Union’s 91-day CD. Dividends are compounded daily and post monthly for this account. Early withdrawal will cost you 60 days’ dividends.

A one-time $5 membership fee to the Consumers Cooperative Association also qualifies you for membership to Consumers Credit Union, which was originally established in 1910 as Cooperative Trading Company of Waukegan in Illinois.

6. Evansville Teachers Federal Credit Union — 0.35%APY, $1,000 minimum deposit

This 3-month certificate from Evansville Teachers Federal Credit Union earns a solid rate for such a short term. You’ll only need $1,000 to deposit to secure this rate.

Evansville Teachers Federal Credit Union was established in 1936 by a group of Indiana teachers in response to the Great Depression to help serve the financial needs of teachers at the time. Today, ETFCU membership is still open to teachers, but it also serves through other employers, organizations and family members. You can also join by donating as little as $5 to the Mater Dei Friends & Alumni Association.

7. TIAA Bank — 0.35% APY, $1,000 minimum deposit

You’ll need to set aside only $1,000 to benefit from TIAA Bank’s 3-month Yield Pledge CD. Interest on the certificate is compounded daily and credited monthly, and it will automatically renew at maturity for the same term. The penalty for an early withdrawal from this account is equal to 22 days of simple interest.

Established in 1998, TIAA Bank is a division of TIAA, FSB, which was founded in 1918. TIAA Bank is headquartered in Jacksonville, Fla., but operates entirely online.

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on TIAA Bank’s secure website

Member FDIC

8. Hiway Federal Credit Union — 0.35% APY, $25,000 minimum deposit

Dividends are calculated daily on this 3-month CD from Hiway Federal Credit Union, which requires a substantial opening balance of $25,000. But investing only $10,000 will still get you a rate that just misses the top 10. Withdrawing before maturity will cost you 30 days’ dividends. The certificate automatically renews for the same term if you don’t make any changes within the 14-day, post-maturity grace period.

Minnesota-based Hiway Federal Credit Union opens its membership outside the Metro Community area to employees of partner organizations. You can also qualify if you become a member of the Minnesota Recreation and Park Foundation or the Association of the United States Army for a small donation.

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on Hiway Credit Union’s secure website

NCUA Insured

9. Affinity Plus Credit Union — 0.30% APY, $500 minimum deposit

The APY listed here is for a 3-month Affinity Plus Basic Certificate. Dividends are compounded and credited monthly. Withdrawing money before the three months is up carries a stiff penalty of 90 days’ interest, essentially wiping out any benefit, so be sure you can leave your money untouched until the CD matures.

There are many avenues of eligibility for membership in Affinity Plus, most centering around your employer or participation in select Minnesota areas. But anyone can join by making a one-time $25 payment to the Affinity Plus Foundation.

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on Affinity Plus Federal Credit Union’s secure website

NCUA Insured

10. Signature Federal Credit Union — 0.30% APY, $500 minimum deposit

You can get started with a 3-month Signature FCU share certificate with $500. Dividends are compounded and credited monthly. Signature FCU allows you to transfer your interest out of your CD each month or you can reinvest it to grow your money even faster. You’ll forfeit 45 days of dividends if you withdraw your money early.

You can join Signature Federal Credit Union if you are a member or employee of select partner organizations; by being sponsored or referred by a member; or by enrolling in the American Consumer Council at no cost.

Short-term CDs vs. long-term CDs: Which are better investments?

Both short-term and long-term CDs are great investment tools, although they serve different purposes depending on your savings goals. Long-term CDs are better for saving for goals years in the future. They also help you lock in high rates for years to come to protect against a rate-dropping climate.

Short-term CDs, on the other hand, are better when you have some extra cash you need to stash away for a bit. You can take advantage of high rates, but there is the inherent risk that in three or six months, that rate may have gone down. On the flip side, a short-lived term allows you to take advantage of rising rates more quickly.

A CD alternative that would still allow you some flexibility in catching rising rates would be to open no-penalty CDs instead. Like their name suggests, no-penalty CDs allow you to avoid the typical early withdrawal penalty associated with CDs. That way, when you start to see higher available CD rates, you can close up one CD and deposit those funds in a new, higher rate account without losing money.

Because short-term CDs expire so quickly, it might make sense to open a more liquid savings product instead. “A reasonable alternative is to just keep that money in a savings or money market account for three or six months,” suggests Ken Tumin, founder of DepositAccounts.com, a LendingTree-owned company. “In fact, the savings account rates at many internet banks are actually quite a bit higher than their 3- and 6-month CD rates.”

However, there is always the chance of your variable savings account rate decreasing without notice. So if you can open one of the best 3-month CDs above, the returns could be worth locking away your money for a few months.

Starting off a mini CD ladder with a 3-month CD

Many CD ladder guides suggest building a ladder starting with a 1-year CD. That technique results in CDs that mature every year. But you can also just as easily kick off a CD ladder with 3-month CDs. That would allow for more frequent maturity dates. For example, you could start a ladder with 3-month, 6-month, 9-month and 12-month CDs. When the 3-month, 6-month and 9-month CDs mature, you would renew each one into a 12-month CD. The steady state of the ladder would then be just 12-month CDs that mature every three months.

You can also create a ladder with longer-term CDs that still mature every three months. In this case, it’s a little more complicated when starting the CD ladder. In sticking with the example above, you could also open a 24-month and 36-month CD at the outset. After several rollovers into various terms over the next few years, the ladder’s steady state would have a 36-month CD maturing every 3 months. This could be an ideal way to take advantage of high rates now while also leaving some room for higher rates in the future. It also offers opportunities for you to receive a payout every three months.