6 Low-Risk Ways To Earn More Interest on Your Money

If your savings currently live in a standard (low-yield) deposit account, you’re wasting a simple opportunity to make money. But chasing higher returns can seem risky or complicated.

In fact, you can get a terrific return for the money that stays stagnant in your account, anyway — for very little effort. Each option comes with its own inconveniences, but narrowing down the perfect choice for your situation is fairly straightforward.

Let’s look at six low-risk ways to earn more interest on your money.

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Key Takeaways

• Low-risk ways to earn interest protect your principal while paying steady, modest returns: Think FDIC-insured accounts, U.S. Treasuries and money market products rather than stocks.

• Match the option to when you'll need the money: A high-yield savings account or money market account keeps cash liquid, while CDs and Treasuries reward locking it up longer.

• A high-yield savings account is the best default for everyday cash: It's FDIC-insured, highly liquid and pays far more than a traditional savings account.

• Federal insurance covers up to $250,000: FDIC (banks) and NCUA (credit unions) protect deposits per owner, per ownership category — but money market funds aren't insured.

• Treasuries are government-backed and flexible: T-bills, T-bonds and inflation-protected TIPS carry very low default risk, and you can sell before maturity without a penalty.

• Inflation is the real risk: Even with no chance of loss, your purchasing power can erode if your APY trails inflation — a particular concern with long CDs.

Summary generated by AI, verified by MoneyLion editors

What Are Low-Risk Ways To Earn Interest?

Think of low-risk ways to earn interest as conservative investments where it’s highly unlikely for you to lose any meaningful principal. These are typically Federal Deposit Insurance Corporation (FDIC)-insured bank accounts, U.S. Treasury securities, money market accounts and the like. They give you reliable, predictable returns instead of high growth potential, which is why their yields generally lag behind riskier assets like stocks.

Here’s the tradeoff: In exchange for knowing you won’t lose money during a market downturn (as is the case with, say, stocks), you’ll get a lower return. An ideal low-risk investment protects your money while giving you steady, modest interest as a bonus.

Best Low-Risk Options for Cash You May Need Soon

The low-risk options that meet the above criteria have wildly varying terms when it comes to accessibility. If you think you’ll need that money in the near future, liquidity may be your primary concern — above even the return rate.

High-Yield Savings Accounts

A high-yield savings account (HYSA) is ideal for an emergency fund when you want to keep things extremely liquid. They’re FDIC-insured, and they pay considerably more than a traditional savings account.

Rewards Checking Accounts

A rewards checking account is best for those who already use debit frequently. You’ll often earn a flat percentage back on specific purchases, which can be even more lucrative than a high-yield deposit account depending on your spending.

Money Market Accounts or Money Market Funds

A money market account (MMA) is a sort of hybrid between a high-yield savings account and a checking account. Depending on the financial institution, you’ll get the excellent annual percentage yield (APY) of a HYSA while also being able to access your money by check and debit card.

A money market fund, on the other hand, is a mutual fund that invests in government and corporate debt. Your share prices are typically very stable — but when markets experience a rare severe downturn, your investment may lose value. The account is also not FDIC-insured (unlike an MMA), so you’re not protected against a foundering bank.

Best Low-Risk Options if You Can Lock Money up Longer

If you’re certain you won’t need the cash you invest for a long while (think months or years), you can typically get a higher return in exchange for limited access for a fixed length of time.

Certificates of Deposit (CDs)

Certificates of deposit (CDs) are best suited to those who want to lock in a high APY for a lengthy period and are willing to leave the money untouched for a while to achieve it. You can choose between short-term and long-term CDs that range from just a month to several years. If you elect to take out your money early, you’ll usually be slapped with a hefty early withdrawal fee.

Treasury Bills and Treasury Bonds

Treasury bills (T-bills) and Treasury bonds (T-bonds) are government-backed securities. T-bills last up to one year, while T-bonds can last longer. Unlike CDs, you’re free to keep them until term or sell them beforehand without penalty.

TIPS

Treasury Inflation-Protected Securities (TIPS) are popular with those who are worried about inflation. They automatically adjust their principal value based on how inflation erodes the dollar.

How Safe Is “Low-Risk”?

Savings accounts, CDs and MMAs are typically insured by either the FDIC (for banks) or the National Credit Union Administration (NCUA) (for credit unions). That makes them safe, up to $250,000 per account owner per ownership category in the event that the financial institution fails.

Not all high-yield options have this feature, however. Again, U.S. Treasuries are government-backed, so there’s very little chance of default. And bond funds and money market funds, while still considered extremely conservative, come with a different kind of risk: moving share prices that can (very rarely) result in losing some of your principal.

Perhaps the biggest danger to your low-risk investment is losing ground to inflation. It’s conceivable that inflation will outpace your earnings — so while you won’t technically lose money, your purchasing power can deteriorate over time. This is especially risky with CDs, where you pledge not to touch your money for an extended period.

How To Choose the Right Low-Risk Option for Your Goal

To choose the right low-risk option for your goal, first identify what the money is for:

• For an emergency fund, prioritize two things: liquidity and safety. A high-yield savings account tends to be one of the safest ways to earn interest, as you can access the cash quickly — and it’s FDIC-insured.

• If you’ll need the money to make a purchase in several months to a few years, CDs or Treasuries with a strategic term can lock in a good rate with minimal risk.

• If you’re in between investments and want to earn high APY while you decide, a money market fund or money market account can be a good choice.

• If your primary goal is steady income, certain bond funds or annuity-like choices can make the most sense. They can be complicated, though — from things like ongoing costs to rules about when you can access your money. Be sure you understand what you’re getting into before you commit.

Common Mistakes To Avoid

When it comes to low-risk ways to grow your money, there are a couple of easy mistakes to make.

• Make sure you don’t leave too much cash in accounts with low APY. A simple move to a higher-yield account can add up quickly.

• Don’t tie up your emergency savings in anything with early-withdrawal penalties (or otherwise slow access). Life happens, and you need to be able to pull from that fund at a moment’s notice.

• Don’t assume all “money market” accounts are the same. Money market funds aren’t FDIC-insured like MMAs at banks. 

• Don’t chase the highest advertised rate without first reading the fine print. It’s critical to understand the fee schedule, balance requirements and withdrawal rules.

Bottom Line

Finding the best low-risk ways to earn more interest on your money is about balancing your needs with a strong APY. Think about safety, how quickly you might need your money and the return you can get without relinquishing your flexibility.

For most folks, a high-yield savings account is the best default for everyday cash. It’s familiar and relatively easy. But CDs, money market accounts (or funds) and Treasuries might make more sense for certain situations — like cash you can stand to float for a while.

FAQs About Low-Risk Ways To Earn Interest

What is the safest way to earn interest on money?

The safest way to earn interest on money is to use a high-yield savings account, CD or money market account. The only real risk to your money is inflation outpacing your APY.

Are CDs safer than savings accounts?

CDs aren’t inherently safer than savings accounts — they’re both insured by the FDIC or NCUA, after all. In fact, savings accounts can be slightly “safer” in terms of accessing money, as you won’t be at risk of early withdrawal fees when touching your funds.

What is the best low-risk option if I need the money soon?

If you need your money soon, a high-yield savings account or MMA is often the best low-risk option to earn more interest. These pay more than a regular savings account while keeping your cash accessible.

Key Terms

• Low-risk investment: A conservative option where losing meaningful principal is highly unlikely, such as an insured account or Treasury security.

• High-yield savings account (HYSA): An FDIC-insured, liquid account paying far more than a traditional savings account.

• Money market account (MMA): An FDIC-insured hybrid of savings and checking, often with check or debit access.

• Money market fund: A mutual fund investing in short-term debt — stable but not FDIC-insured, so it can rarely lose value.

• Certificate of deposit (CD): A fixed-term, fixed-rate account with a penalty for early withdrawal.

• Treasury securities: Government-backed T-bills and T-bonds you can hold to term or sell early without penalty.

• TIPS: Treasury Inflation-Protected Securities that adjust principal to keep pace with inflation.

• FDIC/NCUA insurance: Federal coverage protecting deposits up to $250,000 per owner, per ownership category.

Sources

• FDIC: Deposit Insurance 

• NCUA: Share Insurance Fund 

• TreasuryDirect: Treasury Securities 

• SEC: Money Market Funds 

Summary generated by AI, verified by MoneyLion editors

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