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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.

Back to a Cash Economy?

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With the recent increase in new fees at banks, and the backlash it has caused, people are starting to determine what the alternatives are.  At the moment, there are still banks and credit unions that are maintaining their current fee structure without adding anything new.  Many of those are also maintaining their “free” accounts.  But, if the Durbin Amendment remains, it may be only a matter of time before they buckle under the costs and start removing “free” accounts and adding fees.

What then?  It that happens, we might see a financial world where all debit cards have a monthly fee.  We might see more annual fees on credit cards, and higher interest on credit cards.  We might see more and more checking and savings accounts having a minimum deposit amount and/or a monthly fee.

Use Cash OnlyAs a card-carrying member of the NGPAF (Not Gonna Pay Any Fees) club, that might just make me decide that I don’t want to use any of their services anymore.  My depository institution might just have to become the coffee can in my backyard.  Seriously, though.  If all of those services become services with fees, we might see a pretty drastic increase in the usage of cash again.  Many of us don’t use cash all that much.  I know I don’t.

And what happens if we return to a cash economy?  The banks get even less transaction fees.  Their income drops because of it.  And we all see what happens when their bottom line is threatened.  More fees.  It could send the banking industry into a never ending spiral of more and more fees until the only people who still use banks are the ones who don’t feel comfortable keeping thousands of dollars in a coffee can in the backyard.

Luckily for me, I belong to a credit union that isn’t likely to add any additional fees anytime soon.  What about you?  Do you belong to a Credit Union or Bank that hasn’t added fees recently?  What if they did?  How long do you think it will be before we have to choose to either pay fees or carry cash?

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Are Banks Getting a Bad Rap?

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As I was traveling to the Financial Blogger Conference a few weeks ago, all the news was talking about how Citi had announced that they would be charging more fees on debit cards.  In fact, there have been quite a few banks that have announced an increase in fees over the last few weeks and months.  There are very few that have free products like free checking or free savings anymore. All told, there’s a lot of anger aimed at the banks right now.  But, is it all their fault?  Or, are they getting a bad rap? Let’s examine where all of this fee increase stuff is coming from.

Durbin Amendment of the Dodd-Frank Wall Street Reform Bill

The Dodd-Frank bill did quite a bit, but the bit we want to look at is the Durbin amendment.  The Durbin amendment was an amendment added with the intention of creating some competition in debit card processing fees.  Specifically, it’s goal was to “To ensure that the fees that small businesses and other entities are charged for accepting debit cards are reasonable and proportional to the costs incurred, and to limit payment card networks from imposing anti-competitive restrictions on small businesses and other entities that accept payment cards.”

Which doesn’t really explain it all that much.  I’ll try, but no guarantees that you’ll be any less confused. (NerdWallet does a really great job of explaining it, actually.) When a credit card/debit card is used as a payment, it gets swiped through a reader.  The reader reads the data, and then sends the data along with the purchase data to a card processor.  The card processor then routes the data and purchase data to the institution that holds the account the card is attached to.  So, a Ally bank’s card and transaction would get routed to Ally bank.  The institution accepts or declines the transaction and sends that back to the card processor.  The card processor sends that on to the merchant.  For it’s (necessary) work as the middleman, the card processor charges an interchange fee.  Basically, a fee for all the routing it did.  The Durbin amendment put a cap on how much that fee could be.  The end result is that some of the larger card processors have to charge larger fees.  Fees that are paid by the banks.  The banks had two options.  They could charge the merchant a larger fee to make up for it, or they could start charging fees to the user (that’s you) and cease many of the “free” programs that were previously supported by the profit margin they were making on the cards.
The U.S. Capitol
If they had passed all of the larger fees on to the merchant, many merchants would have likely stopped taking their cards.  So, believing that the majority of users would lay down and take the extra fees and loss of “free” accounts, they passed the added fees on to the user.  Again, that means you.  What they didn’t count on was the size of the backlash they would get from the added fees.  An educated user base, that has direct access to so many public outlets like social media, is making far more out of the situation than they ever thought would happen.

Does it really mean anything?

Here’s the funny part.  (not really)  There will be a small percentage of users who will move their business to Credit Unions and online banks who are absorbing the added costs and keeping their “free” accounts without adding any additional fees.  But, the majority of users will pay the fee, complain about it, but, ultimately, do nothing.  The new fees will become normal after a year or so, and things will continue on like they were before.  Just with less “free” accounts and more fees.

You should be mad as hell!

But, not at the banks.  They are merely doing what makes the most business sense to them and trying to maintain their profit margin.  Credit Unions don’t work on a profit margin because they are not-for-profit businesses.  Online banks have a higher profit margin due to not having any physical buildings and fewer staff.  The people we should be mad at are our representatives in Washington.  There’s a bill about to be introduced in the House of Representatives that aims to repeal the Durbin Amendment.  If you feel strongly enough against the fees, you should send your state’s representatives (house and senate) a note (or make a call, email, whatever) and tell them you support the repealing of the Durbin Amendment.

Whatever you do, don’t just lay down and take the fees.  Call, email, or write your representative.  And, in the mean time, find a Bank or Credit Union that isn’t passing the added costs on to their users.  Open an account at one of them and move your business.  My personal favorites are ING Direct, Ally, and PerkStreet,  but a local Credit Union would be great too.

photo credit: kevin dooley