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5 interesting places to park cash

Americans are starting to save more money and spend less. The personal savings rate in U.S. has increased up to 5.7 percent according to data from the Bureau of Economic Analysis. It was only a few years ago, back in October of 2007, that the personal savings rate was as low as 1.7 percent.

Saving for a rainy day is always a great idea, but now the question is where to keep your hard earned cash?

There is no doubt that keeping your money in a bank savings account is a safe and time-tested option. Savings accounts are definately better than hiding money under the mattress. The problem is inflation can eat away the purchasing power of your savings. You want safety first, but you also need to make money. Here are a few different ideas for parking your cash.

1. Reward debit cards

If you pay for your monthly purchases with a debit card instead of a credit card, your money is immediately deducted from your checking account or preloaded card. This might sound like a bad deal, but if you use a debit card that offers rewards you can actually save money.

The amount of extra money you earn in your checking account waiting to pay your monthly credit card bill is miniscule, when compared to the cash back and merchant discounts you can receive from using a reward debit card. Consider buying a pre-loaded debit card with significant perks or stashing money in a checking account that has a reward debit card linked to it. Not all banks offer reward debit cards, so you may need to shop around to find the best deal.

2. Global bond funds

In the recent past, short-term U.S. government bond funds were a no-brainer when it came time to name places to park cash. Not anymore. Now you have to factor in what will happen to the price of government bond funds if interest rates shoot higher.

An alternative option is investing in a global bond fund with a short duration. Investing in a global bond fund diversifies your risk by investing in bonds from different countries. Fund managers can move money strategically to the countries with stronger economies and currencies. Many global bond funds still keep a percentage of assets in U.S. Treasury bills.

3. Discounted gift cards

If you play your cards right, loading up on a few gift cards can be a great savings idea. Retailers like Sam's Club, Best Buy and Walmart will sometimes offer discounts on their cards directly from their website or other promotions. The key is to only buy what you need and to search for the deeply discounted cards.

The advantage of buying gift cards with your extra savings is that you can often save more money from your favorite retailers, than the amount of interest you earn from parking your money in CDs, money market accounts or savings accounts. Just remember to avoid gift cards that have extra fees associated with them or that may sit unused on your desk.

4. I-Bonds

Inflation-indexed savings bonds offer investors an easy way to protect their savings from inflation. Individual investors can buy I-bonds online from the Treasury Department for as little as $25. I-bonds pay an interest rate comprised of a base rate and semiannual inflation adjustments. Attractive features of I-bonds include that investors pay no commissions, the bonds are exempt from state and local taxes and federal taxes can be deferred. The value of an I-bond does not fluctuate in value like a TIPS fund or a short-term bond fund, but you must keep it 5 years before you can redeem it without a penalty.

5. Reward checking accounts

The best checking account rates are paid what are called "reward checking" accounts. This type of checking account pays a premium rate on balances up to preset amount, as long as you meet monthly requirements. The specific criteria to earn the best rates can vary from bank to bank, but will typically include receiving electronic statements, making debit card transactions and paying a bill online.

The higher rates and online banking features make reward checking accounts a great place to park cash. Even the rates you earn for your balance over the preset limit are typically higher than passbook checking account rates.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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