The phrase free money sounds like a scam you would see on a late-night infomercial. We get it. Healthy skepticism is good for your wallet. But every year, billions of dollars in government grants, tax credits, and abandoned property sit around waiting for their rightful owners. The government will not chase you down to hand over a check, but if you know where to look, you can claim money that belongs to you.
Once you get those funds, you need a smart plan for where to put them. Letting extra cash sit in basic checking accounts earning practically nothing is a missed opportunity. Dropping your windfall into money market accounts or high-yield savings keeps your cash safe while letting it grow. Here are six legitimate ways to get government money, along with the right ways to store it.
1. Search for Unclaimed Property
State governments are holding onto tens of billions of dollars in unclaimed funds. When a company owes you money and loses track of your current address, state law forces them to turn those funds over to the state treasury. This process happens with forgotten paychecks, abandoned checking accounts, old utility security deposits, overpaid medical bills, and proceeds from a forgotten life insurance policy.
You can search official state databases for free. If your name turns up, you fill out a simple form and submit proof of your identity. People regularly discover a few hundred dollars they forgot ever existed. It costs nothing to check, and claiming your money takes only a few minutes online.
2. Claim Refundable Tax Credits
Tax deductions lower your taxable income, but tax credits are much better because they reduce your tax bill dollar-for-dollar. Refundable tax credits go a step further. If the credit amount exceeds what you owe in taxes, the government sends you the remaining cash as a refund check.
The Earned Income Tax Credit and the Child Tax Credit put thousands of dollars back into the hands of working families every year. If you are carrying a balance on high-interest Credit Cards with a high annual percentage rate (APR)—which is the total yearly cost of borrowing money, including interest charges and fees—using a tax refund to pay down that balance provides an instant financial win.
3. Apply for First-Time Homebuyer Grants
Buying a home is one of the largest financial moves you will ever make. To help people buy homes, state and local housing authorities offer grants and forgivable loans to cover down payments and closing costs. These programs work alongside standard Mortgages to lower your upfront cash needs.
In many cases, these funds are structured as forgivable Loans. As long as you live in the house as your primary residence for a set period, such as five years, you never have to pay the grant back. Combining down payment grants with proper Insurance ensures you enter homeownership with a solid financial cushion.
4. Use the Saver’s Credit for Investing
The government wants citizens to prepare for retirement, so they offer a tax incentive called the Saver’s Credit. This program gives low- and moderate-income workers a tax credit for making contributions to retirement accounts like a traditional IRA or a workplace 401(k).
Think of it as government matching funds for your future. When you put cash toward Investing, the government rewards you by trimming your tax bill or expanding your refund. You build long-term wealth and get immediate tax relief at the same time.
5. Tap Home Energy Efficiency Rebates
Federal and state programs pay homeowners to lower their energy footprint. Through climate initiatives and local utility incentives, you can collect direct rebates and tax credits for installing heat pumps, upgrading insulation, or adding solar panels.
These rebates offset significant portions of the installation costs. Lowering your energy usage slashes monthly utility bills, and upgrading major home systems can help prevent future damage that leads to costly repairs or claims on your Insurance policy.
6. Claim Federal Student Grants
If you or your children are pursuing higher education, federal Pell Grants offer financial assistance based on income and need. Unlike student Loans, grant money does not require repayment as long as you complete your courses.
To access this cash, you fill out the free application for federal student aid. Qualifying for grant cash cuts down on the amount you need to borrow through private lenders, keeping your overall debt burden manageable from the start.
Where to Park Your Government Cash
Once you collect an unclaimed property check, a tax refund, or an energy rebate, you need a strategy for storing that money. Leaving cash in everyday Checking accounts makes it too easy to spend accidentally, and standard checking pays virtually no interest.
How Money Market Accounts Work
A money market account gives you a secure place to store cash while earning competitive interest. It blends the main advantages of traditional savings with the convenience of checking accounts. You get competitive growth rates alongside check-writing abilities or a debit card for direct access to your cash when needed.
Banks calculate your returns using an annual percentage yield (APY)—which is the total interest you earn on your cash over a full year, including compounding. Money market accounts usually offer variable rates that rise or fall based on national interest rate benchmarks. Because these accounts carry federal deposit insurance up to legal limits, your principal stays protected against loss.
Comparing Money Market Accounts to Other Savings Vehicles
To pick the right home for your money, weigh your need for immediate cash access against how much interest you want to earn:
- High-yield savings: Offers competitive interest rates similar to money market accounts, but usually lacks check-writing or debit card features.
- Certificates of deposit: Locks your money away for a fixed term, ranging from months to years, in exchange for a guaranteed interest rate. If you pull cash out early, you pay a penalty fee.
- Checking accounts: Designed for daily bill payments and purchases, but offers little to no interest growth for cash reserves.
If you want top-tier interest while keeping emergency access to your funds, money market accounts and High-yield savings provide the ideal middle ground.
Common Traps to Avoid
Getting money from government programs comes with a few rules and warnings you should keep in mind:
- Middleman scams: Never pay a fee to claim unclaimed property or apply for government grants. Official state databases and grant applications are completely free to use.
- Unexpected tax bills: Some government grants and assistance payouts count as taxable income. Keep part of your payout liquid so you are ready if tax time brings an unexpected obligation.
- Strict residence rules: Down payment assistance programs usually require you to stay in the home for a fixed number of years. If you move early, that grant can convert into debt you must repay.
Approach government programs pragmatically. Claim the funds you qualify for, steer clear of paid services, and put your money into a high-earning account where it works for you safely.