Where can I earn higher interest on savings?

There are three types of banking institutions where you might consider keeping your short-term savings: a commercial bank, a thrift (or savings & loan association), or a credit union. Of these, credit unions offer the best rates on savings vehicles — usually paying about 1% more in interest than traditional banks.

When you put money in a credit union, you become a member of the organization. Because credit unions are nonprofit organizations, they don’t spend a lot of money on advertising or marketing. They pass this savings along to members by paying higher interest rates on savings accounts, money market accounts, and certificates of deposits. While banks are typically insured by the FDIC, accounts at most credit unions are insured up to $100,000 by the Credit Union National Association (CUNA).