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Personal Finance from the Broke Perspective

Ditch Your Low-Interest Account: 7 High-Yield Savings Options in Arizona

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Confession—watching money sit in a traditional savings account earning pennies is ridiculously frustrating, especially with today’s rising costs. If you’re an Arizona resident tired of those measly 0.01% returns, you’re not alone! The good news? You have plenty of better options right in your backyard. Let’s explore seven high yield savings account options in Arizona.

1. Online High-Yield Savings Accounts

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Why settle for tiny returns when you could be earning 15-25 times more interest with just a few clicks? Online banks like Ally, Marcus by Goldman Sachs, and Capital One 360 offer Arizona residents impressive APYs between 4.00% and 5.25% right now.

Since these digital banks don’t have expensive branches to maintain, they pass those savings directly to you through higher interest rates. Most don’t require minimum balances or charge monthly fees, making them perfect for savers at any level. And don’t worry about security – these accounts carry the same FDIC insurance as your traditional bank, protecting your deposits up to $250,000.

2. Arizona Credit Unions

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Your neighborhood credit unions might be Arizona’s best-kept financial secret. Places like Desert Financial Credit Union and Arizona Federal Credit Union consistently offer rates that beat the national averages while keeping your money in the local economy.

Unlike big banks answering to shareholders, credit unions are owned by their members (that’s you!), so they’re focused on giving you better deals, not maximizing corporate profits. Many Arizona credit unions reward relationship banking with special rate boosts when you use multiple services. The friendly, personalized service is a refreshing change from automated phone systems and chatbots.

3. Money Market Accounts

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Need to keep your cash accessible while still earning solid interest? Money market accounts offer the perfect middle ground for Arizona savers. These specialized accounts typically reward larger balances with better rates (often reaching 4.50% to 5.00% for substantial deposits) while still letting you write checks or use a debit card.

Local options like BMO Harris and WaFd Bank offer competitive Arizona-specific money market rates that blow traditional savings accounts out of the water. These accounts make perfect sense for your emergency fund or saving toward a down payment on that Scottsdale dream home – your money grows substantially faster while remaining available when you need it. Just keep an eye on minimum balance requirements, which typically range from $1,000 to $5,000 depending on where you bank. Desert Financial and Vantage West Credit Union currently offer some of the most reasonable minimums paired with impressive rates.

4. Certificate of Deposit (CD) Laddering

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If you’re comfortable setting aside some money for a fixed period, Arizona banks and credit unions offer CDs with seriously impressive returns – currently ranging from 4.50% for shorter terms to over 5.75% for longer commitments. The secret pro move? Create a “CD ladder” by opening several certificates with staggered maturity dates. This strategy gives you periodic access to your funds while maximizing overall returns.

Right now, OneAZ Credit Union and Arizona Federal are featuring some of the state’s most competitive CD rates, especially in the sweet spot of 6-24-month terms. The beauty of CDs is their guaranteed returns. Once you lock in that 5.50% rate, you’ll get exactly that regardless of what happens to interest rates during your term. It’s like getting tomorrow’s harvest at today’s prices, especially valuable when economic conditions remain uncertain.

5. High-Yield Checking Accounts

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Why keep your spending money in a zero-interest checking account when it could be earning premium returns? Several Arizona financial institutions now offer checking accounts with interest rates rivaling dedicated savings vehicles—we’re talking 3.00% to 4.50% APY on your everyday spending account. These accounts typically ask you to meet monthly requirements like setting up direct deposit, making a minimum number of debit card purchases, or signing up for paperless statements – small tasks for significant returns.

Local standouts include Copper State Credit Union and TruWest Credit Union, both offering some of Arizona’s most generous rewards checking programs. Many of these accounts throw in valuable extras like ATM fee reimbursements (perfect for those weekend trips to Sedona or Lake Havasu) and cashback rewards on purchases.

6. Treasury Bills and TIPS

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Looking for rock-solid security with surprisingly competitive yields? U.S. Treasury securities offer Arizona residents government-backed options that are currently outperforming many traditional bank products. Short-term Treasury bills now yield between 4.25% and 5.50% depending on maturity, with options ranging from four weeks to one year. For those worried about inflation eating into savings (a valid concern in today’s economy), Treasury Inflation-Protected Securities (TIPS) automatically adjust with the Consumer Price Index, ensuring your purchasing power remains protected. As an Arizona resident, you’ll appreciate that interest earned on Treasury securities is exempt from state income tax, giving you a built-in advantage over fully taxable bank interest. The best part? You can purchase these directly through TreasuryDirect.gov without paying fees or commissions to middlemen, keeping more money in your pocket. It’s like having the full faith and credit of the U.S. government as your personal banker.

7. Arizona-Specific Bond Programs

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Did you know you can earn strong returns while helping build a better Arizona? The state offers unique bond programs that let you support local development projects while earning competitive interest. The Arizona State Treasurer’s LOCAL Investment Program connects taxpayers with opportunities to invest in government projects while earning rates frequently exceeding 4.00%. Municipal bonds issued by Arizona cities and counties not only provide tax advantages for residents but deliver yields between 3.50% and 5.00% depending on the specifics. Your investment goes directly toward funding schools, roads, water systems, and other critical infrastructure improvements in communities throughout the state.

For Arizonans in higher tax brackets, the tax-exempt status of qualifying municipal bond interest creates tax-equivalent yields that can exceed 6.00% – particularly appealing when compared to fully taxable savings options. It’s rare to find an investment that aligns your financial goals with your community values so perfectly.

Your Roadmap to Better Returns

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Ready to stop leaving money on the table? Transitioning from your underwhelming account doesn’t have to be complicated. Start by thinking about how quickly you might need to access different portions of your savings. Emergency funds should remain easily accessible, while money for longer-term goals can be placed in higher-yielding options with some time commitments. Compare not just the headline interest rates but also any fees, minimum requirements, and access limitations to find the right fit for your situation.

Sometimes Saving is Wrong

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Invariably, every few months, we get a wave of posts talking about “what would you do if you won $x,xxx,xxx?”  Or, what you would do with a smaller windfall.  And invariably, a majority of the people talk about how they would save the money.  And in some cases they are right.  But, most of the time, they are wrong.

Why are they wrong?  Because they’re looking at saving from the wrong direction.  I wouldn’t save a dime of it.  I would use every last cent of it to pay off debt.  And until I have no more debt, that’s what I would do every time.  Sure, maybe I’d by a few things that I needed, but the rest goes to debt.  Saving in a savings account doesn’t do you damn bit of good if you have debt.

If you have any debt at all, you really should think twice about having any savings at all except for an emergency fund.  Why?  Because, there is no savings account in the world that will guarantee you more interest than what you are paying on your debt.   If you pay off $100 of your credit card debt, you’ve just earned the 19% interest that you would have paid.  You “saved” more with that $100 than you would have in years if you had put it into a savings account.

Don’t fool yourself into thinking you need to have anything more than an emergency fund in the bank.  All the rest is just money that could be making you 19% interest instead of the paltry 1.30% that you’ll get at that high-yield online savings.  When you get rid of your debt, then is the time to start building your savings!

Some of you will likely ask “what about retirement savings?”  That’s a gray area.  There are some that would argue that if you don’t get that debt paid off, you’ll end up taking that money out early anyways.  Others would argue that due to the tax benefits of retirements accounts, and the magic of compound interest, you really should be putting money into your retirement too.  My current opinion is stuck somewhere in between.  I think that you should be putting a little into retirement, just so you have something going.  But, I also think that you should keep in minimal until your debt is gone and then ramp it up like gangbusters.

So, what would you do if you won $x,xxx?

Choosing an Online Savings Account is Easier Than You Think

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If you really want to over simplify things, you can choose online savings accounts by no other requirements than the interest rate that the account is paying out.  If that’s all you care about, then the current high yield king is WaMu with 3.75% (current as of 8/5/08).  The rest fall behind, but most all of them stick in the 3-4% range with only a few outliers in each direction.

So, unless you really, really want to chase rates, you’ll want to pick a savings account with some other things in mind.  Each person is going to have different things that they like and require, so I’ll share how I selected my accounts first.

When I was looking for a high-yield savings, I was looking for something to hold our emergency savings.  A lump of money that wouldn’t get touched for quite some time (hopefully). Because the money was just going to sit around interest rate was one of the most important factors.  At the time, I had narrowed it down to three accounts.  ING Direct, HSBC, and e-Trade.  e-Trade was paying 4%, HSBC was at 3.75% and ING Direct was at 3.3%.  They were all pretty close.  I decided that the interest difference was fairly minimal.  I chose ING Direct.  The deciding factor was the $25 bonus I got for opening an account with more than $250.  Even at 4%, that was well over a years worth of interest up front.

I’ve since moved our account over to e-Trade for the higher interest rate.  I still hold our account at ING Direct (several actually including a Orange Checking) for other household savings accounts such as a home improvement fund.  It really is just a matter of accounting now, so I could easily move the money from one to another.

When you go to choose your account, be sure to take into effect some of these factors.

  • You’ll want to make sure that the account will let you transfer to another savings account.  ING Direct doesn’t.  I get around that by pulling the money from my e-Trade account.
  • Is there any risk involved to the bank?  With a few banks being shut down, this is more of a factor than it should be.  Remember to make sure that wherever you put your money, it’s FDIC or NCUA insured.  As long as that is in place, you won’t lose your money up to $100,000.  And don’t be afraid to double check insurance claims with third parties.
  • Do you need a Debit Card?  Many of the accounts don’t give you a debit card.  ING direct does, and that was another important factor in my choice.
  • Are there any bonuses involved?  As far as I know, ING Direct is the only one that currently has a bonus program.  All you need is a referral code and you’ll get $25 with a new account of over $250.  (If you need a referral, let me know and I can get you one.)
  • Do they require other accounts?  Will they make you open other accounts to hold the savings account?  WaMu, for instance, requires a online checking account in order to have an online savings account.  Not a huge deal, but can be a bit of a nuisance.

I’m sure that there are other factors to take into effect when you select your account, but those are the big ones.  With interest rates as competitive as they are in this niche of accounts, you’ll be hard pressed to make your selection on interest rate alone.  And keep in mind that just having a high yield account puts you well on your way to debt freedom and financial independence!