*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you’d like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
With interest rates at all-time lows, we’re not getting much from our savings accounts or CDs these days. It hardly seems worth it to stash money in a savings account that makes a few pennies of interest, or even long-term CD’s that tie up our money and only pay a penny or two more. However, I have found three creative ways to make my savings account earn more interest.
Private P2P Lending
Loan your money to others, making a private loan at an attractive interest rate. This rate would beat the banks, but also give you more than your savings account. If the banks currently charge 9% on a personal loan to a creditworthy individual, you can loan your money at 7%. This beats the bank, but earns you more than the 0.15% your savings account would offer. P2P loan sites such as Prosper, Lending Club, Zopa and EasyP2PLoans can act as the middle-man for you in the transaction. They can also spread your cash over multiple borrows to help reduce the risk. I’ve seen interest as high as 10% of some of their packages. You can loan out as little as $25 or as much as $10,000, and spread it around as you see fit. I recommend a few small loans to test the waters first. I’ve just used P2P for a few notes at 9% return, but time will tell if this pans out for me.
The US and UK are paying low interest rates, but that doesn’t mean the whole world is doing the same. Interest rates in Australia are over 4%. As a foreigner you can’t open bank accounts there, unless you live there, but there are ways to snatch a piece of that higher interest. Open a foreign currency account, called a Forex account, in the US and buy into the AUD/USD (Australian Dollar against US Dollar). This means you are buying Australian Dollars, and thus you’re getting the higher interest rate. This interest gain is called “rollover.”
One caveat, if the actual vale, or exchange rate, of the Australian Dollar tumbles, you could lose on the principle. Proceed with caution, but this can be a savvy way to earn extra interest. Of course, the exchange rate could go the other way, and the value of the Australian Dollar goes up, which would even make you some bonus cash on your principle. A few years ago I employed this method when the AUD was at 0.7900 and I cashed out when it hit 0.9000, making me an extra $1,100 on my principle investment of $7,900 in addition to the 4% interest.
Online Savings Accounts
If you just want something simple and easy, check for deals with online savings accounts. These will pay more than your local banks in interest. Don’t expect more than 3%, and often closer to 2.5 %, but his will still beat the 0.15% that the average neighborhood bank is paying now. Shop around for a good deal on the net, as these offers change weekly.
More from this contributor:
How to Better Diversify Your Investments
The Best Investments You Can Make for Less than $500
Quick Start Guide to Extra Income on Stocks with Covered Calls