Savings rates are yielding paltry returns while the Federal Reserve maintains its stance in monetary policy. The current savings environment doesn’t offer much growth potential for cash so it’s time to find be uses to get ahead financially.

At the moment, yields on online savings accounts, money market accounts, and 12-month certificates of deposit (CDs) are treading close to 1 percent. At that rate, a $10,000 balance earns only $100 (before taxes) after one year. That money could be used more wisely so that it ends up making or saving more than $100.

Before embarking on the search for higher returns, the age-old advice from personal finance gurus remains relevant – build a reliable emergency fund first. Despite dismal interest earnings, liquid savings is essential for unplanned expenses. Having saved at least 3 months’ worth of living expenses would create a nice cushion for unexpected costs. In an emergency fund, accessibility takes precedence over yield.

If you have excess cash after building solid emergency fund, here’s some better uses for it:

1. Pay down high interest credit card debt.

Even with outstanding credit scores, the yield on savings accounts won’t be able to match the interest rate charged by a credit card. Not only does it increase the final cost of a purchase over the long run, credit card debt creates an immense psychological burden.

If you had a $10,000 credit card balance with an 11% APR that was paid off with 12 monthly payments of $884, you’d end up paying $606 in interest charges. Pay it all off now and it saves the equivalent of a 6.06% APY savings account.

2. Make a larger mortgage or loan payment.

Whether it is a home loan, auto loan, or student loan, a larger monthly payment will save your money in addition to shortening the repayment term.

On a 30-year mortgage with a 6% annual interest rate for $100,000, paying $50 extra on every monthly payment will save you $24,569 over the course of the loan. Not to mention that the mortgage will be paid off 5 years and 5 months earlier.

3. Max out the 401(k) or IRAs.

For much of the working population, the most common employer-sponsored retirement plan is the 401(k). Employees tend to save part of their paychecks that is just enough to get the maximum company match. But, workers can contribute up to $16,500 for the year 2011 and reduce their tax liability. Plus, there is major growth potential depending on the investments made in the 401(k).

A traditional IRA and Roth IRA are also popular tax-advantaged accounts that many people don’t care enough to max out. Again, tax benefits and a broad selection of investments can offer larger profits.

But, the ultimate goal is to establish a sizable nest egg for retirement.

4. Invest in broad market bond funds.

Bonds tend to offer higher yields when interest rates are low. They are popular investments to diversify a portfolio and to reduce performance volatility. Risk in bonds cannot match the safety of an FDIC-insured bank account but that is often the trade-off for better returns. To make it simple, consider investing in broad market bond ETFs.

Exchange-traded funds offer simple, low cost alternatives to small investors who may not have enough to put into the mutual fund equivalent. The Vanguard Total Bond Market ETF (NYSE:BND) and iShares Barclays Aggregate Bond ETF (NYSE:AGG) are both very popular bond ETFs with low expense ratios that carry yields of over 3.40%.

Everyone has their own preferences and circumstances that dictate a different perspective in saving and how they allocate extra funds. Where are you putting your cash?

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