The bright side of higher interest rates

The public is quick to point out the negative repercussions of higher interest rates, most notably their impact on the housing market. However, in an era when those looking to borrow and spend on the cheap once had all the advantages now those who have money on hand to save can reap rewards.

Interest rates are higher than they have been in years, which means for those who are looking to see their savings grow there are options out there that will yield better returns than the meager pickings once available. While interest-bearing savings and checking accounts will generally not help you rake in big bucks, there are other accounts that can make your investment go further.

“Certificates of Deposit: CDs traditionally offer better return rates than a regular bank savings account. Don’t necessarily turn to your primary bank for a CD, however. You may be able to get a better rate if you shop around.

Six-month and one-year CDs are the most popular, but longer term CDs may allow you to lock in a higher rate or rates for years to come. Many CDs also allow you to “roll over” your money into another account — some do this automatically. Be sure to watch CD maturation dates carefully as a result, especially if you are planning on withdrawing the cash.

“Money Market Accounts: Money market accounts are similar to regular savings accounts, except they may require a higher minimum balance, restrict the number of withdrawals and typically pay a higher interest rate for using your money. If you have discretionary income that you can afford to have sit and make money, money market accounts could be a better option.

“Treasury Bills: Government-issued securities called treasury bills (or T-bills) are short-term investments. They may mature in four, 13 or 26 weeks and offer relatively high yields. What’s more, T-bills offer the added benefit that the interest earned on the bills is exempt from state and local taxes.