How to Earn More On Your Cash In 2023
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How to Earn More On Your Cash In 2023

While the rate environment is dramatically different now, the most important piece of advice that I can give as we enter 2023 is the same as that which I would have given in 2022, 2021, or 2020.   Get your cash out of non-competitive account.  Whereas in past years, that advice meant encouraging people to move their money from accounts paying 0.01% to those paying 0.60%, top rates are now 6 or 7 times higher, making it even more important to act now.   The old excuses – “we aren’t talking about a lot of money”, “I am making so much on the market, in bitcoin, etc.”, “it just isn’t worth my time”, “my tax bracket is so high that all the extra earnings will be taxed away anyway” – don’t work anymore.  And, with inflation real and present, earning more on your cash gives you a fighting chance on maintaining purchasing power parity.

In short, there is nothing more important than seeking out the most competitive online savings rates and locally available rates.    And, if you want further confirmation of this strategy, we recommend at least one competing site.

Even though the Fed is not finished raising rates, many are eager to lock down the certainty in earnings that a one-year, 18-month or two-year certificates of deposit now offer.  While short-term US Treasuries have been compelling over the last several months, short-term CDs may become dramatically more compelling as banks and credit unions are forced to seek capital to maintain FDIC and NCUA deposit requirements in early 2023.  Do not take it for granted that short term US Treasury will remain above similar duration bank CD rates.

If you are willing to sacrifice liquidity in order to secure an attractive, fixed interest rate for a longer period (3 years, 4 years or 5 years), online bank or credit union CDs are now your best bet.   US Treasury bonds are currently offering much lower yields for these durations, even after accounting for their state and local tax benefits.   Agency bonds – particularly those offered by Federal Home Loan Bank, Federal Farm Credit Bank and TVA which are state and local tax free - may offer higher rates than CDs, but are always callable after one year or less.  Also, they are considered by many to be less secure than CDs (as long as you stay within FDIC and NCUA limits) as there is a moral obligation on the part of the federal government, but not the explicit guarantee that the FDIC and NCUA provide.

There are a lot of ways to earn more in 2023 and we hope you’ll continue to make BestCashCow part of your strategy.

Happy New Year!

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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