Top 8 Ways You Could Be Missing Out on Free Money

There’s an old saying in economics that “there’s no such thing as a free lunch” — but in real life, there really is “free money.” Banks, retailers, credit card companies, and even Uncle Sam will give you free money if you make a few simple, smart financial moves.

Here are a few of the biggest ways in everyday life that you are probably missing out on free money right now.

1. Leaving money in a zero-interest checking account

If you have cash sitting in a zero-interest checking account, you are missing out on interest income, and you are actually losing money to inflation. The longer your money sits there, the more buying power you lose.

Any extra cash you have should be earning interest — aka “free money” that you don’t have to work for. Your bank (or other banks) should be paying you for letting it use your deposits. Find a better place to keep your cash than a zero-interest checking account.

2. Not using a high-yield savings account

The national average savings account interest rate is currently only 0.46%. You can do so much better than that! The best savings accounts and money market accounts right now are paying 5.00% APY or higher.

Don’t settle for the average bank’s unimpressive APY on your savings. Choose a high-yield savings account. And if the Fed keeps interest rates high for the rest of 2024 and into 2025, these high APYs will remain in place.

3. Not getting your employer match on your 401(k)

If you have a job with an employer-based retirement plan like a 401(k), you could be missing out on free money. Does your employer offer a matching contribution? If so, take it!

Many employer 401(k) matches are equal to a certain percentage of your salary. It varies by company, but for example, some employers might match 50% of the first 6% of salary that you contribute. So if you make $50,000 per year and contribute 6% of that to your 401(k) ($3,000), your employer will toss in an extra $1,500.

That’s not just “free money,” it’s free money you’ve actually earned. Don’t leave that money on the table. Not taking your 401(k) match is like not using your paid vacation days. Take it! Use them! Get the full compensation that you deserve!

4. Not investing in IRA accounts

Along with a 401(k) or other workplace retirement plan, many people can qualify to put money into another tax-advantaged retirement account called an individual retirement arrangement, or IRA. There are two types of IRAs — traditional and Roth.

The traditional IRA gives you “free money” in the form of a tax deduction for your contributions, similar to a 401(k). (There are some income limits for who can qualify for this traditional IRA tax break.) If you are in the 22% tax bracket and you put $7,000 into a traditional IRA for 2024, that means you’ll get about $1,540 of “free money” in reduced taxes.

The Roth IRA gives you “free money” in the future, in the form of tax-free withdrawals in retirement. You don’t get a tax break today, but your money is allowed to grow tax free for the rest of your life.

5. Not paying off high-interest debt

If you are carrying a balance on your credit card and paying interest each month, you are likely paying an annual rate of over 20% APR. If you can pay off credit card debt faster, that means “free money” in the form of interest that you don’t have to pay.

Unless you’re one of the best, luckiest investors in the world, it’s hard to find a higher return on investment (ROI) than 20%. Paying off high-interest credit card debt is almost always the first thing you should do with extra cash.

6. Not using a health savings account (HSA)

If you have a qualifying high-deductible health plan (HDHP), you are eligible to use a health savings account (HSA) to save money for healthcare expenses. Just like a traditional IRA or 401(k), the money you put into a HSA is tax deductible — free money!

For example, if you’re in the 22% tax bracket and you put $4,000 into a HSA for 2024, that means you get about $880 of “free money” off your federal income tax bill.

7. Not using cash back apps

Have you ever wanted to get “free money” just from shopping? Now you can. The best cash back apps reward you for shopping at your favorite stores and brands, online or in person. Some of these apps pay cash rewards of 1%, 2%, 5%, 10% or more. If you’re a savvy shopper and you enjoy finding good deals, using cash back apps could be well worth the time and effort.

8. Not using rewards credit cards

If you have good credit and aren’t vulnerable to overspending or forgetting about payment due dates, you can take your “free money” hunt to the next level with cash back rewards credit cards.

Some of the best cash back cards offer 1%-6% cash back on everyday spending or big purchases. Some also have welcome offers where you can get (for example) $200 of extra cash back by spending a certain amount within the first few months of opening your account.

Bottom line

You’re probably missing out on free money right now, by not getting tax breaks, interest income, and cash back rewards. With just a few simple strategies, you can get more of what you deserve from banks, retailers, employers, and the federal government.

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