While many banks pay a very small interest rate on cash accounts, you can find money market funds that currently pay approximately 4% interest with very little risk. If you have one of these accounts, you may also be able to write checks and transfer money. If you purchase a government cash reserve money market fund you may not have to pay state tax on your interest. These funds are offered by brokerage firms such as Fidelity, Vanguard, JP Morgan and others. Online savings accounts such as Discover and Capital One Financial are paying around 3.3%. Many traditional banks are paying very low interest rates. Look into your cash returns and safety and determine what you would like to do!
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