This Is How Much More You Could Be Making With Smarter Savings Choices

An estimated 63% of Americans don't have enough money on hand to cover an unplanned $500 expense, according to recent SecureSave data. If you're in that boat, your first order of business should be to build yourself some sort of emergency fund.

But let's say you're set on emergency savings and have extra cash at your disposal. You may be inclined to keep that cash in the savings account you've used for years. But that decision may be costing you.

A little research could go a long way

The interest rates banks pay on savings tend to follow the federal funds rate, which is the rate banks charge each other for short-term (typically overnight) loans. When the federal funds rate rises, banks tend to offer more generous interest rates in savings accounts. When the federal funds rate drops, banks tend to pay less interest to customers.

However, within that setup, there's a wide range of interest rates you may be privy to as a saver. Banks can ultimately offer whatever interest rates they want. Many will raise rates in conjunction with the federal funds rate to remain competitive. But there's nothing stopping one bank from paying 4% interest on a savings account while most others are paying 4.5% or more.

That's why it's important to shop around for a good interest rate on your savings. A little research might lead you to find that your bank is one of the stingier banks out there, and that could be costing you.

Let's say you have $10,000 socked away in the bank. If you're earning 4% on your money, that's $400 a year (assuming your interest rate stays put for 12 months, which is not guaranteed to happen). If another bank offers 4.5%, you're shorting yourself $50 a year. Or, to put it another way, choosing a bank with a more competitive interest rate could, in this example, make you $50 richer for essentially no extra work.

You may want to consider a CD

Another option you may want to look at to earn more interest on your money is to open a certificate of deposit (CD) instead of keeping your cash in a savings account. CD rates tend to be higher than savings account rates because with the former, you're making a commitment to keep your money in the bank for a preset period. And your bank, in turn, has the right to penalize you for an early withdrawal, which is something you won't find in a savings account.

However, if you're certain you have a sum of money you won't need for a period, then a CD could make financial sense. Going back to our example, let's say you have $10,000 and your savings account is paying 4%, while a 12-month CD is paying 5%. With the latter, you're earning an extra $100 in interest over a year at a minimum.

Why at a minimum? Remember, the interest rate on your savings account is not guaranteed. But CD rates are. So that 4% rate could drop during the next 12 months, leading to an even wider gap.

Saving money is not an easy thing to do. So the fact that you may be in a position to earn interest on savings means you've done a great job of building up some cash reserves. But if you do your research and make savvy choices, you may find that you can earn even more on your money. And that's unquestionably a good thing.