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While the first thing one should do is check out the interest rates at the banks in their area, in this day and age, you have a lot more to choose from than just your local bank. With the internet, you can start an online account with any of the larger banks just about anywhere.

There are several different types of accounts that you can use to earn interest and they all have different interest rates.

The first and probably most common is the regular savings account. This is the type that most people have at their local bank along with their checking account. The accounts can be tied together and you can usually do transfers between the two over the phone or internet. The advantage of this type of account is that they allow you the most flexibility to move your money whenever you need it and there is usually a very low minimum balance required. If you have one at your local bank you can get the money out immediately any business day or anytime for that matter at an ATM. Unfortunately, most of these types of savings accounts don't pay a very high interest rate with most of them being around 1% or less right now.

On the other hand, if having your money available any time you need it is not a big concern, then certificates of deposit are a good way to go. They generally pay a higher interest rate but you have to leave your money on deposit for a set amount of time. Generally the term ranges from 6 months to 2 years with the longer terms paying the highest interest. If you have a large amount of money, you can get a "jumbo" CD, which pays a higher rate of interest. The main problem with this type of account is that if an unforeseen problem or emergency arises and you need to get the money out, they charge you a penalty for early withdrawal.

However, there is a type of account that gives you the best of both worlds. It's called a money market account. It usually pays a higher interest rate than a regular savings account and they are offered by many local banks. You can also sign up for one online at Capital One direct banking or ING direct. They are about the same interest rate and right now are around 4.4% for their high yield money market account. There are no fees and no minimum balance. You can tie it to your checking account and transfer money in or out when you need to. They are also covered by FDIC so your money is secure. I think this is the best way to go and I have one of these accounts myself.

There are other ways to make money with your money, but these are a few of the best that keep your money available and not tied up in a long term investment.

Happy saving and thanks for reading.

Learn more about this author, MJ Miller.
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