Our experts answer readers' banking questions and write unbiased product reviews (here's how we assess banking products). In some cases, we receive a commission from our partners; however, our opinions are our own. Terms apply to offers listed on this page.
As an entrepreneur, one of my biggest money goals is always to find new ways of bringing in passive income. Over the past few years, I've done this in a handful of different ways, from introducing new products and services within my business to becoming an affiliate for brands I like and earning money as people buy the products I promote.
Outside of my business, I've also looked to find new ways of bringing in passive income from my financial portfolio. One of the best ways I've done that is by keeping my cash in interest-generating savings accounts and CDs.
But during the early days of the pandemic, when the Federal Reserve lowered interest rates, the annual percentage yield kept dropping on both these types of accounts. To get the best value, I decided to use them strategically and move my money back and forth based on which one offered the best interest rate (provided there was no penalty for doing so).
Since 2020, I've shifted my money between these two types of accounts at least once or twice a year to maximize my passive income-earning opportunities. I estimate that I've made a few thousand dollars with this strategy since then. Here are four situations when I've moved my money.
1. When HYSA rates go down
Over the last few years, the interest rate on my high-yield savings account has fluctuated quite a bit. Whenever I see that the rates are higher with CDs, and the terms aren't longer than 18 months (since I want to make sure I have access to the money if I need it in the short term), I'll move a chunk of my cash into a CD.
Once, for example, my bank sent me an offer for an 18-month CDwith an interest rate that's one full percentage pointhigher than the rate offered at that point on my high-yield savings account. I'm currently assessing how much cash I'm willing to put into this CD and not touch it for that time period in order to take advantage of the better interest rate.
2. When a CD matures
At any given time during the year, I have as many as three CD accounts open and in use. Usually, at least once a year, the money in that CD matures, which means I'm able to decide whether to withdraw the cash or renew the CD for the same term, though the interest rate might have changed (either higher or lower).
At that time, if the APY offered in my high-yield savings account is higher, I'll move the cash back into that account to earn compound interest and leave it there or hunt for another high-interest CD.
3. When an influx of cash can be left alone
As an entrepreneur, my income often varies. I live on a strict budget that helps me manage my spending and put aside money every month to help me reach my financial goals.
But when I get an influx of cash from a new project or a product I created that generates a lot of profit, I find myself with a chunk of money that I can put aside and not touch for a while. That's when I'll hunt for a CD that offers the highest interest rate that I can find, for the time period that I'm willing to leave the money untouched.
If i'm not sure whether or not I can keep the cash in a longer-term CD, and don't want to risk having to pay early-withdrawal penalties, I'll search for a no-penalty CD.
4. When I need to access the cash for other opportunities
At least twice a year, I invest in new streams of passive income, whether that's putting the money into REITs (real estate investment trusts) or creating a new product to sell to my audience (such as an online course).
Depending on the interest rates available, I might have more cash in CDs than in my high-yield savings account. But when I know that in the near future I'll need some of the cash to invest in other passive income streams, I make sure to move money out of the no-penalty CDs I have into my high-yield savings account.
This article was originally published in October 2022.
FAQs
If you're sending a large amount of money, you may want to use a wire transfer at your bank. You'll need the recipient's account and routing numbers. You and the recipient will likely incur fees. Wire transfers take place in less than 24 hours but do not occur on weekends or on bank holidays.
Is it worth moving money from one high yield savings account to another? ›
Once your cash is in a high-yield savings account, it's often not worth the effort to switch to another bank offering a slightly higher APY (such as less than 1% more).
Should I move money from savings to CD? ›
Savings accounts give you more flexibility to make withdrawals, but CDs offer fixed interest rates that can boost some savings if you're able to leave your money alone for a set time. The best place to deposit your cash generally depends on how long you're willing to leave it in your account.
How much money can you transfer from one bank to another online? ›
Bank transfer limits
| Type of transfer | Transfer limit |
|---|
| ACH Same Day transfer | Up to $1,000,000 |
| Bank of America Corp. | $3,500 per day or $10,000 per week |
| JPMorgan Chase & Co. | Up to $25,000 per day |
| Citigroup Inc. Standard ACH | Up to $10,000 per day |
1 more rowNov 13, 2023
What is the law regarding wire transfers and the IRS? Under the Bank Secrecy Act (BSA) of 1970, financial institutions are required to report certain transactions to the IRS. This includes wire transfers over $10,000, which are subject to reporting under the Currency and Foreign Transactions Reporting Act (31 U.S.C.
How do I transfer a large sum of money to a family member? ›
Venmo, Cash App, Google Pay, Zelle, PayPal, and wire transfer are some of the safest way to send money digitally. Money transfer apps are inexpensive and convenient options for paying family and friends. Wire transfers at a bank are ideal for securely sending large amounts domestically or internationally.
Is there a downside to having multiple bank accounts? ›
The more accounts you have, the harder it can be to keep track of their details and requirements. Unless you keep careful and updated records, it might be challenging to keep track of usernames, passwords and details such as beneficiaries and scheduled transfers or withdrawals.
How much is too much in high-yield savings account? ›
Gaines reiterates that even most high-yield savings accounts lose value to inflation over time. “More than two months' worth of living expenses in a savings account is too much given the ability to earn around 5% from easily accessible money market accounts that should not fluctuate in price.”
Can you ever lose your money with high-yield savings account? ›
Safety: As noted, most high-yield savings accounts are either FDIC or NCUA insured for up to $250,000. Moreover, as deposit accounts, they're not susceptible to the ebbs and flows of the market, so there's little to no chance you'll lose the money you deposit into one.
Why you should put $5,000 in a 6 month CD now? ›
Unlike traditional or high-yield savings accounts, which have variable APYs, most CDs lock your money into a fixed interest rate the day you open the account. That's why if you suspect that interest rates will soon drop, it can be a good idea to put money in a CD to preserve the high APY you would earn.
One major drawback of a CD is that account holders can't easily access their money if an unanticipated need arises. They typically have to pay a penalty for early withdrawals, which can eat up interest and can even result in the loss of principal.
How much does a $10000 CD make in a year? ›
Earnings on a $10,000 CD Opened at Today's Top Rates
| Top Nationwide Rate (APY) | Balance at Maturity |
|---|
| 6 months | 5.76% | $ 10,288 |
| 1 year | 6.18% | $ 10,618 |
| 18 months | 5.80% | $ 10,887 |
| 2 year | 5.60% | $ 11,151 |
3 more rowsNov 9, 2023
Yes, you can transfer money from one bank to another. There are many ways to do this, including using your bank's website or mobile app, a personal check, a cashier's check, a wire transfer or an ACH transaction. There are pros and cons to each method, and some come with transfer fees.
What is the maximum amount you can transfer from bank to bank? ›
The limits can be either per day, for a singular transaction, or maybe the number of transactions per month, as we examined in this article. The amount you can transfer ranges from $10k to as high as $25k, depending on your bank's policies and relationship with them.
What is the maximum amount I can transfer online per day? ›
NEFT/RTGS/IMPS Charges, Timings, Limits
| Transaction Limits/Timing | 01.00 hours – 19.00 hours | 00.00 hours – 01.00 hours, 19.00 hours – 00.00 hours & Bank Holidays |
|---|
| Minimum | ₹ 2 lakh | ₹ 2 lakh |
| Maximum | ₹ 20 lakh | ₹ 10 lakh |
Methods for transferring money from bank to bank include wire transfers, automated clearing house transfers, peer-to-peer payment apps, personal checks and cashier's checks. There may be fees to send money with a wire transfer, cashier's check, digital-payment app or expedited ACH transfer.
How much money can I transfer from one bank to another bank? ›
There is no limit on the minimum or maximum amount allowed to be transferred using NEFT. For cash-based remittance, an upper limit of Rs. 50,000 per transaction is applicable. In this, customers must furnish complete details including address, telephone number, etc.
Can I withdraw 100k from my bank? ›
Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like. It is, after all, your money. Here's the catch: If you withdraw $10,000 or more, it will trigger federal reporting requirements.
How much money can you transfer to another person's bank account? ›
How much money can I transfer between banks? If you're transferring money online to another one of your HSBC accounts, there is no limit to how much you can move. If you're paying bills or making payments to friends and family – there is a daily limit for online bank transfers of £25,000.
