Worried About Your Job? Here’s How Today’s High Interest Rates Can Be Your Ally

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A Strong Safety Net Can Help You Weather a Job Loss

A sudden job loss can throw anyone’s finances into a tailspin. While your regular paycheck will stop arriving, all of your monthly bills, your rent or mortgage payment, and your need to buy groceries will keep marching on. The mere prospect of this can bring on significant anxiety.

But a loss of income doesn’t have to turn into a financial disaster. If you can plan ahead and build up a classic emergency fund, you may be able to keep the situation from becoming an emergency at all. And the more you have in reserve, the longer you can weather the storm of a job loss.

Luckily, you have financial history in your corner right now. That’s because today’s interest rates are historically high, offering dozens of options to earn returns on your cash in the 4% range, or even 5% and up. That means whatever money you stash in your safety net can be boosted into something bigger, simply by being smart about where you put the money.

High-Yield Savings and Checking Accounts Are Your Best Friend for Cash

The most obvious option is a high-yield savings account. These accounts are often offered by online banks, so you may need to open an account outside your primary checking institution. But doing so can significantly amp up what you earn on your emergency money.

Consider that the national average rate for savings accounts is currently 0.42%, while many of the biggest banks, like Chase and Bank of America, pay even worse with a near-zero rate of 0.01% on their savings accounts. Then consider that our daily ranking of the best high-yield savings accounts includes 16 options that pay 4.35% to 5.00% APY.

In other words, you can multiply your interest earnings by 10 (or even more) by choosing a top-paying savings account vs. just an average savings account. And that boost can help propel you toward your safety net goal.

Another option is a high-yield checking account. Though not as common or generally as straightforward as high-yield savings accounts, high-interest checking accounts sometimes pay even more. Right now, the top checking options pay 5.00% to 6.00%. The catch is that you typically have to jump through a hoop or two to earn these ultra-high rates every month.

Have Some of Your Savings Invested? Try These Bonus Tips

If you have some of your safety net in investments rather than just in the bank, you may have options for harvesting some cash from these accounts. Selling the actual investments, like a stock or index fund, may not be something you’d want to do in an emergency since it can have significant tax implications and may also require you to sell when the market is down. But any cash you can collect from these investments could be useful if you’re still building your safety reserve.

First, if any of your stocks, mutual funds, or ETFs pay a quarterly or annual dividend, you can capture that cash and add it to your emergency fund. The key is to turn off the option to reinvest dividends for that account. Once you do that, any received dividend payments will be deposited to your account as cash.

Next, check how your uninvested cash is being held. If it’s going into a money market fund that pays just 2%–3%, you can likely do better by asking your brokerage to sweep your uninvested funds into a cash management account—many of which pay 4% or more right now.

Lastly, even if you can bump up to a higher cash APY at your brokerage, that still might not hold a candle to what you could earn by transferring the money to a high-yield savings or checking account. Cash transfers between brokerages and banks are easy to set up and are usually executed within a day. That means moving dividend money out of your brokerage account as soon as you receive it is simple, allowing you to quickly put it to work earning a stronger return in your high-yield bank account.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.