The average U.S. checking account yields just 0.07%, while the typical savings account delivers only 0.38% in annual returns, according to FDIC data.
Government money market funds that averaged a 5.42% seven-day yield in December 2023 dropped to 3.83% by December 2025, according to SEC Money Market Fund Statistics.
Those falling returns create urgency for savers who want their uninvested dollars working harder before yields decline any further across the market.
Fidelity Investments published a guide outlining seven distinct vehicles designed to help savers earn more on their uninvested cash before returns shrink further.
Fidelity shares 7 ways to earn more on your cash
Fidelity’s guide covers seven cash alternatives across three dimensions that most savers overlook: how easily you can withdraw your money, what kind of insurance protects it, and how sensitive the yield is to Fed rate decisions.
The single best way to avoid getting ruined from a market downturn is not to expose yourself to more risk than you can tolerate in the first place
The firm stresses that no single option works for every situation, and that spreading cash across several vehicles based on when you actually need it is the more strategic move. Here is what each option offers.
1. Savings accounts
Savings accounts remain the most flexible option. Your money is liquid, meaning you can access it whenever you need to, and it is backed by FDIC insurance up to $250,000 per person, per bank, per account ownership category.
Some brokerage firms also offer cash management accounts that automatically sweep funds into FDIC-insured bank savings accounts, Fidelity notes.
The catch is straightforward: when the Fed cuts rates, savings account yields tend to dip quickly. For emergency funds and bill-paying cash, that trade-off is usually acceptable. For anything beyond that, other options may earn more.
2. Money market funds
Money market mutual funds invest in short-term, low-risk debt and come in three main categories: government, prime, and municipal. Government funds hold Treasury securities and government agency debt.
Prime funds may also invest in corporate securities, and municipal funds hold debt issued by states, cities, and public agencies. These funds aim to maintain a stable $ 1.00-per-share price and provide investors with relatively easy access to cash.
Brokerage accounts holding money market funds are protected by the Securities Investor Protection Corporation up to $500,000, with a $250,000 cash limit, though SIPC does not protect against declines in value.
Yields may decline gradually after Fed rate cuts because funds must maintain a weighted average maturity of 60 days or less, meaning the portfolio turns over relatively quickly, Fidelity explains.
3. Certificates of deposit
Certificates of deposit offer fixed interest rates for set periods ranging from one month to 20 years.
The trade-off is clear: higher potential yields in exchange for restricted access. If you need your money before the CD matures, expect to sell at a loss or pay early withdrawal penalties.
Fidelity points out that brokered CDs, purchased through a brokerage firm, can aggregate holdings from different FDIC-insured banks in a single account, allowing investors to exceed the $250,000 insurance cap.
A CD ladder, which staggers maturity dates, can free up portions of your cash at regular intervals. Existing CDs issued before a rate cut continue to pay their original yields until maturity, making them a hedge against falling rates.
4. Credit union share certificates
Credit union share certificates function almost identically to CDs but are insured by the National Credit Union Administration instead of the FDIC, with the same $250,000 per-issuer limit.
Credit unions distribute earnings as dividends rather than interest, though those dividends are taxed at ordinary income rates just like CD interest, Fidelity notes.
One distinction worth flagging: a credit union‘s board can prohibit dividend payments when earnings fall short of required reserves.
And if a credit union fails, the NCUA is not obligated to pay interest that has been earned but not yet distributed. Callable share certificates carry additional risk because the issuer can redeem them before maturity if interest rates drop.
5. Individual short-duration bonds
For cash you do not need immediately, Fidelity suggests considering short-duration bonds across four categories: U.S. Treasury, corporate, tax-free municipal, and taxable municipal. Treasury bonds carry the full backing of the U.S. government.
Corporate and municipal bonds introduce credit risk and call risk, which tends to increase as advertised yields climb. Holding these bonds to maturity is strongly recommended.
Selling before maturity may mean accepting a lower price if buyers are scarce, and secondary-market transactions carry fees.
Diversification across multiple issuers requires a meaningful investment, making this option better suited to larger cash positions. After a rate cut, existing short-term bonds typically rise in price but still mature at par value.
6. Short-duration bond funds
Short-duration bond funds, whether index-tracking or actively managed, can be bought and sold daily. That flexibility comes with a caveat: most bond funds have no set maturity date, so returns reflect the market value of the portfolio at the time you sell.
When the Fed cuts rates, the bonds held by these funds may rise in value, providing a short-term price boost. Over time, though, the fund reinvests in lower-yielding new bonds, which gradually pull down income payouts, Fidelity explains.
7. Deferred fixed annuities
A deferred fixed annuity is a contract with an insurance company that locks in a fixed interest rate for a set period, typically three to 10 years. All taxes on interest are deferred until withdrawal, and there are no IRS contribution limits.
For investors looking to shield a portion of retirement savings from market volatility, this option offers predictability. Early withdrawals may trigger surrender charges, though some contracts allow annual withdrawals of up to 10 % without penalty, Fidelity notes.
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Annuity guarantees depend entirely on the issuing insurance company’s ability to pay its claims, so the firm’s financial strength matters as much as the rate it advertises. In a sustained low-rate environment, newly issued annuities will eventually offer lower returns.
Fidelity also flags that the guarantee period length is something investors can tailor to their own timeline, making annuities more flexible than they first appear. But the key consideration is whether you can genuinely afford to leave that money untouched.
Unlike a CD or bond that matures in months, a fixed annuity commitment stretches for years, and surrender charges during that window can eat into the very returns that made the product attractive in the first place.
Choosing the right vehicle depends on your timeline and risk tolerance
Fidelity frames the central question for every saver as how soon the money will be needed and how much return variability is acceptable for that purpose.
Emergency funds call for liquid vehicles, while cash designated for goals months or years away can earn higher yields through CDs or bonds, Fidelity noted.
Fidelity’s seven-vehicle framework, the firm says, is designed to help savers match each portion of their cash to a chosen combination of yield, safety, and access.
Related: Fidelity spots hidden triggers behind budget failures
