3 Reasons to Switch Banks Even When You're Getting a Good Interest Rate on Your Savings

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice.

KEY POINTS

  • Even though your bank may be paying a nice interest rate, perhaps another bank is paying even more.
  • You might also switch banks if you can open a CD with more favorable terms and get access to superior customer service.

Banking is one of those things you tend to get used to. If you've had your money at the same bank for many years, it can be difficult to push yourself to make a switch. This especially holds true if your bank happens to be paying a pretty good interest rate on your savings account right now.

But even if you're happy with the rate you're getting, switching to a new bank could still work to your benefit. Here are some of the reasons why a change could make sense.

1. You can snag a higher interest rate elsewhere

Maybe your bank is paying 3.75% on savings accounts right now. But if there's another bank offering 4.25% on your money, moving over could mean earning a lot more interest.

Let's say you have $20,000 in savings. An extra 0.5% of interest means walking away with an additional $100 in the course of a year -- all for basically doing nothing. So you shouldn't necessarily let your familiarity with your current bank stop you from earning more money at another.

Our Picks for the Best High-Yield Savings Accounts of 2024

APY
4.25%
Rate info Circle with letter I in it. 4.25% annual percentage yield as of July 12, 2024
Min. to earn
$1
APY
4.50%
Min. to earn
$0.01
APY
5.10%
Min. to earn
$0

2. You can sign up for a CD whose early cash out penalties aren't as harsh

CD rates tend to be higher than savings account rates because you're required to commit to keeping your money in the bank for a preset period of time. That could be six months, 12 months, two years, or longer.

When it comes to the principal amount of money you put into a CD, there's no risk in opening one provided your deposit doesn't exceed $250,000 and your bank is FDIC insured. However, you do run the risk that you might have to cash out your CD before it comes due. Go that route, and you'll likely face a penalty, the extent of which will depend on your bank.

Capital One, for example, charges a penalty of three months of interest for cashing out a CD early when its term is 12 months or less. And your bank might have a similar policy. But if you can find a bank that offers a smaller penalty for cashing out a CD early, then it could pay to move your money over.

3. You're hoping for better customer service

Whether you reach out for help from your bank occasionally or frequently, it should be a good experience from start to finish. If your bank doesn't offer such great customer service, then it doesn't matter that it's paying a good interest rate on your savings. You still deserve to be able to walk in or pick up the phone and have an efficient, pleasant, helpful interaction with the person tasked with assisting you. Period.

Moving from one bank to another can be a jarring experience if you've banked at the same institution for many years. But if these situations apply to you, it could pay to make a change. And remember, you're apt to get used to that change in time, even if it feels strange to bank elsewhere initially.

These savings accounts are FDIC insured and could earn you 11x your bank

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Two of our top online savings account picks:

Rates as of Jul 12, 2024 Ratings Methodology
Advertisement
American Express® High Yield Savings Citizens Access® Savings
Member FDIC. Member FDIC.
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: 4.25%

APY: 4.50%

Min. to earn APY: $1

Min. to earn APY: $0.01

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