In the past, CDs have been a great option to earn extra money without taking much risk. They were a no brainer for a lot of people for at least a part of their investment plan. But with interest rates as low as they are, those times are gone.

And for those that aren’t familiar with CDs, they are a product offered by banks and credit unions that pays a set amount in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

In the late 90’s and at some points in the 2000s, a 5-year CDs would pay between 5%-8%. Right now, it is hard to find a 5-year CD anywhere that pays more than 1.5% and the 3-month CDs are paying less than 1%. And with inflation rates between 1.5%-2%, not many people are willing to lock up their money just to lose money after inflation.

Here are a few alternatives to CDs:

High-yield savings account

Traditionally, savings accounts pay interest of about 0.1% (almost nothing) but high-yield accounts are paying about 1% right now. And while that is still not a very high return, it is not bad considering there is no risk, it is probably much higher than what you are currently getting on your savings account, and there is no time commitment.

Many banks now offer this type of account including CitiBank, PNC, and Capital One.

Paying off debt

If you are looking for a safe return on investment, paying off debt is a great way to go. Especially if your debt has high interest (ie credit cards), paying it off can save you way more than you could make on most investments.

Even with debt that has relatively low interest (like a mortgage), paying it down faster makes you an easy 3-4%. And while interest rates are so low, for many people, it makes sense to do a refinance.

Municipal bonds

Bonds have historically made 3-5% but interest rates have driven those returns way down. But for high income earners, municipal bonds may still be of interest. The one big advantage of municipal bonds is that the earnings are often non-taxable on the federal and state level. So as you move up the tax brackets, municipal bonds make more and more sense.


These types of very low risk investments rarely make sense for someone’s entire portfolio but they can be a great option for your short-term cash. With traditional checking and savings accounts paying almost nothing, doing something will help keep inflation at bay.

Dallen Haws is a personal finance and business enthusiast, ASU grad (Fear the Fork!), co-founder and financial planner at Haws Financial Planning.