A question I get a lot is “How can I get more interest without risking my money or making it inaccessible to me?”. Instead of replying to this question each time it is asked, I decided to write this post about it. That way everyone can benefit from the information!

If you have a savings account right now, you are probably aware that interest rates are not where they used to be. For example, I believe I receive something like .07% interest on my money. Petty amount of change.

Most people don’t want to let their money sit there collecting dust, and not get anything in return. On the flip side, they don’t want to put money in stocks and risk the stock market, or buy an investment property and have their money tied up. So what other options are out there? Is there a middle ground?

I am here to tell you that there is! There is a way to make more than that .07% interest yet still have the money available in case of an emergency or an amazing opportunity.

Certificate of Deposits (CDs) are the tool we are going to discuss today.

CDs are items that you place a specified amount in for a period of time. You receive higher interest than a normal savings, but you have to leave your money there the entire time. If you take your money out early, you must pay a fee.

You are likely thinking “Rachyl, how does that help me? I don’t want to pay a fee if I need my money”. Don’t worry, there is a trick to CDS, called staggering.

Staggering CDs is as simple as it sounds. You buy CDS a month or 2 apart. That way, the CDs come available one month after another.

Let’s talk about an example to clear this up a little. Let’s say you have $3,500 sitting in a savings account and you want to start earning more money on it. You can get a 12 month CD for 1.25% interest, in increments of $500.

January 2017: Buy a CD for $500    — Current cash balance is $3,000

March 2017: Buy a CD for $500       — Current cash balance is $2,500

May 2017: Buy a CD for $500          — Current cash balance is $2,000

July 2017: Buy a CD for $500           — Current cash balance is $1,500

August 2017: Buy a CD for $500      — Current cash balance is $1,000

October 2017: Buy a CD for $500     — Current cash balance is $500

December 2017: Buy a CD for $500  – Current cash balance is $0

January 2018: First CD becomes due, buy additional CD for $500

March 2018: Second CD becomes due, buy additional CD for $500

Etc.

Each time a CD comes due, you get the $500 plus interest accrued. After your interest reached $500, you can put it in another CD. Soon you will have CDs becoming due every month or few weeks. You always have cash flow in case you need it, and you are earning more than your pitiful .07% interest.

Have you ever staggered CDs? Let me know in the comments below!