Consumer savings rates have been above 4% for two consecutive months. The last time that happened was over 10 years ago. I haven’t found numbers for March yet, but I am sure we are still saving at high rates. So the question is – Where do you invest your cash savings? Here are my suggestions, both good and bad:

• Mattress or buried coffee can - Don’t trust anyone? Worried that the banking system is going to collapse? Keep your cash at home and close to you. Easiest access along with the biggest risk. Can you imagine coming home and finding out someone has robbed your house? This is an option, but I highly discourage keeping all of your cash at home. I would recommend keeping at least $200 around in case of an emergency.
• Checking Account – You probably spend most of your money from here anyway, so why not keep it here? For starters, you most likely aren’t getting any interest on your account. Additionally, you may end up spending some of your reserves accidentally or somebody else might with a stolen check. If you have a high interest checking account then this is a reasonable solution.
• Savings Account – You most likely will find a similiar situation with your savings account as you did with checking. Very low interest rates and possible fees. However, online savings accounts tend to have higher rates with no fees, making them a better option. I’m sure you have all heard of ING Direct and similiar banks. The rates aren’t as high as they used to be, but they are the best available. Leave a comment if you’d like an ING referral for $25.
• Money Markets – Money market accounts are savings accounts on steroids. Of course, the current economic conditions these steriods are watered down. Most money market accounts offer slightly higher rates than traditional savings. The knock on these is that they usually have mininum balances in order to get the higher rates. This is a good place to park your 3-6 month emergency fund cash.
• Certificate of Deposits (CD) – Putting your cash in a CD is a good solution for savings that aren’t needed to be accessed any time soon. CDs require a minimum time period of investment, usually 6-12 months to get decent interest rates. You can cash in the CD early, however you will lose a portion of your interest in fees. CDs are for medium to long term cash savings. There is also a technique called CD laddering that will help maximize your cash liquidity and interest earning.

These are the safest places to park your increased cash savings. Whenever we get out of this financial funk, the interest rate on these vehicles will raise. Any other place I’m forgetting to mention?