You can save money in cash, with a prepaid card, through a brokerage account, or by lending to others — each method keeps your money separate from your checking account and earns you something, though none offer the same protection as a bank savings account.
If you do not have access to a traditional savings account — whether because of banking restrictions, past account closures, or simply not having the documents banks require — you have other ways to set money aside and sometimes earn interest or returns on it. The trade-off is that most alternatives lack the FDIC insurance that protects bank deposits up to $250,000, so your money carries more risk if the institution fails or if fraud occurs.
The method you choose depends on how much you need to save, how quickly you might need the money, and whether you want your savings to earn returns. Some methods are safer but earn nothing. Others offer better returns but require you to lock money away or accept more risk.
Key Takeaways
- Cash at home or in a safe deposit box costs nothing to maintain but earns no interest and is vulnerable to theft or loss.
- Prepaid cards let you load money and spend it like a debit card, though fees can eat into small balances and they do not earn interest.
- Brokerage accounts and money market funds can earn returns through interest or investment growth, but your money is not insured by the FDIC.
- Peer-to-peer lending platforms let you lend money to others and earn interest, but you risk losing money if borrowers default.
- Credit unions sometimes have lower barriers to membership than banks and offer savings accounts with FDIC-like protection through the NCUA.
Keeping cash at home or in a safe deposit box
The simplest method is to keep physical cash in your home — in an envelope, a jar, or a locked box — or to rent a safe deposit box at a bank or credit union. You control the money entirely, no institution can freeze it, and there are no fees or monthly minimums. You can withdraw any amount at any time without notice.
The downsides are significant. Cash earns zero interest, so inflation slowly reduces its purchasing power. Cash at home is vulnerable to theft, fire, or loss. Safe deposit boxes cost $25 to $200 per year depending on size and location, and if you die, your heirs may face delays accessing the box. If you lose the cash or it is stolen, you have no recourse — there is no insurance and no way to recover it.
This method works best for small emergency funds you want to access immediately, or for people who distrust institutions entirely. It is not a long-term savings strategy because your money does not grow.
Using a prepaid card to separate spending from savings
A prepaid card is a plastic card you load with money upfront, then spend down like a debit card. You can buy one at a drugstore or online without a bank account or credit check. Some prepaid cards let you set up multiple "pockets" or sub-accounts within the same card, so you can mentally separate your spending money from your savings.
Prepaid cards do not require a minimum balance, do not report to credit bureaus, and do not involve a bank that can close your account. You own the money on the card — the card issuer cannot freeze it or take it. Some cards offer direct deposit, so your paycheck can go straight to the card.
The catch is fees. Most prepaid cards charge a monthly maintenance fee ($5 to $15), a fee to load money, a fee to check your balance, and a fee for out-of-network ATM withdrawals. If you load $100 and pay $10 in monthly fees, you lose 10 percent of your savings in a year. Prepaid cards also earn zero interest, so your money does not grow. They are useful for keeping money separate and safe from theft, but not for building wealth.
Opening a money market fund or brokerage account
A money market fund is an investment fund that holds short-term, low-risk debt like Treasury bills and corporate bonds. You can open one through a brokerage firm — Fidelity, Vanguard, Charles Schwab, and others offer them. Money market funds currently earn 4 to 5 percent annually, depending on market conditions, and you can withdraw your money within a few days.
A regular brokerage account lets you buy stocks, bonds, or index funds. If you invest in a diversified index fund, your money can grow over time, though it can also lose value in the short term. Brokerage accounts have no monthly fees, no minimum balance requirements at most firms, and you can withdraw money whenever you want (though selling investments takes a few days to settle).
The major risk is that neither money market funds nor brokerage accounts are insured by the FDIC. If the brokerage firm fails, your money is protected by SIPC insurance up to $500,000, but that protection is narrower than FDIC insurance and does not cover all scenarios. If you invest in stocks or bonds, the value can drop, and you could lose money. Money market funds are very stable but not risk-free.
This method works well if you have $1,000 or more to save and can leave it untouched for at least a few months. The returns are real, but they come with real risk.
Peer-to-peer lending platforms
Peer-to-peer lending platforms like Prosper and LendingClub let you lend money to individuals or small businesses and earn interest on the loan. You can start with as little as $25, and interest rates range from 5 to 36 percent depending on the borrower's credit and the loan term. Your money is locked in for the loan period — typically 3 to 5 years — and you receive monthly payments of principal and interest.
The appeal is that your money earns a return higher than a savings account or money market fund. The risk is that borrowers default. If a borrower stops paying, you lose that money. Most platforms diversify your investment across many loans to reduce the impact of a single default, but defaults still happen. You could lose 5 to 15 percent of your money over time, depending on the platform and economic conditions.
Peer-to-peer lending is not insured by the FDIC or SIPC. It is a real investment with real risk of loss. Use it only if you can afford to lose the money and do not need it for several years.
Credit unions as an alternative to banks
If you cannot open a bank savings account but want FDIC-like protection, a credit union may accept you. Credit unions are member-owned cooperatives that often have lower barriers to joining than banks. Some require you to live or work in a specific area, belong to an organization, or have a family member who is already a member. Others are open to anyone.
Credit union savings accounts are insured by the NCUA (National Credit Union Administration) up to $250,000, the same as FDIC insurance. They often charge lower fees and offer better interest rates than banks. If you were denied a bank account because of ChexSystems or past overdrafts, a credit union may still work with you.
To find a credit union you can join, search the CO-OP network or the Alliant Credit Union directory. Call ahead and ask what documents they need and whether they accept people with your situation. Some credit unions specialize in serving people with banking barriers.
Comparing the methods side by side
| Method | Minimum to Start | Interest or Returns | Insurance Protection | Access to Money | Best For |
|---|---|---|---|---|---|
| Cash at home | Any amount | None | None | Immediate | Emergency fund under $1,000 |
| Safe deposit box | $25–$200/year | None | None | During business hours | Important documents, valuables |
| Prepaid card | $10–$50 | None | None (card issuer holds funds) | Immediate via ATM | Separating spending from savings |
| Money market fund | $1,000–$3,000 | 4–5% annually | SIPC up to $500,000 | 3–5 business days | Short-term savings with modest returns |
| Brokerage account | $0–$1,000 | Varies (0–15%+ annually) | SIPC up to $500,000 | 3–5 business days | Long-term growth, higher risk tolerance |
| Peer-to-peer lending | $25–$500 | 5–36% annually | None | 3–5 years (locked in) | Long-term savings, high risk tolerance |
| Credit union savings | $0–$100 | 0.5–2% annually | NCUA up to $250,000 | Immediate | Safe savings with low barriers to entry |
What to do if you were denied a bank account
If you have a history of overdrafts, fraud, or unpaid fees, you may appear in ChexSystems, a banking database that flags you as a risk. Banks check this database before opening accounts, and a negative mark can block you for up to five years. You can request your ChexSystems report for free at chexsystems.com and dispute errors.
If you are in ChexSystems, your options are a credit union (which may not check it), a prepaid card, or cash savings. Some banks also offer "second chance" checking accounts designed for people with banking history issues — these usually have higher fees but do not require a clean ChexSystems report. Call your local bank or credit union and ask directly whether they offer second chance accounts.
If you were denied because you lack an ID or proof of address, bring a passport, state ID, tribal ID, or consular ID to a bank or credit union. If you lack proof of address, ask whether they accept a utility bill, lease, or letter from a government agency. Requirements vary by institution.
Frequently Asked Questions
Can I earn interest on cash I keep at home?
No. Cash at home earns zero interest and loses purchasing power to inflation over time. If you want your savings to grow, you need to put money in an account or investment that pays interest or returns — a money market fund, brokerage account, or credit union savings account.
What happens to my money on a prepaid card if the company goes out of business?
Prepaid card companies must hold customer funds in a bank account, and that bank account is FDIC insured. So your money is protected even if the card company fails. However, you may face delays getting your money back while the company is liquidated. Check the card's terms to see which bank holds the funds.
Is a money market fund safer than keeping money in a brokerage account?
Money market funds are more stable — they aim to keep the share price at $1 and rarely fluctuate — but they are not safer in the insurance sense. Neither is FDIC insured; both are protected by SIPC insurance up to $500,000. Money market funds are safer from loss of principal, but brokerage accounts with diversified index funds are safer from inflation eroding your money over time.
How do I know if a credit union is legitimate?
Check whether it is chartered by the NCUA (federal credit union) or your state (state credit union). Search the NCUA's database at ncua.gov or call the NCUA at 1-800-755-6222. Legitimate credit unions display their NCUA or state charter number and insurance coverage limits on their website and in their offices.
Can I use multiple methods at once?
Yes. Many people keep a small emergency fund in cash at home, a prepaid card for everyday spending, and a money market fund or credit union account for longer-term savings. Spreading money across methods reduces risk and lets you use each tool for what it does best.