Here's Why I Don't Spend Time Switching Savings Accounts

I have money in a high-yield savings account. In fact, I keep several different accounts because I want to keep emergency funds and savings for big purchases separate from my checking account.

High-yield savings account providers change their rates periodically, and also introduce new products. As a result, if I wanted to, I could move my money around when an account offering a better rate comes along. I do not choose to spend my time doing this, though. And there are a few simple reasons why. 

It takes too much time with too little payoff

The biggest reason why I don't spend time switching my savings accounts is because it is too much effort for the additional interest I could potentially earn.

See, I don't keep a lot of money in savings -- only the minimum I need for my emergency fund and for short-term purchases I am planning. At most, I might have around $20,000 in my savings in most circumstances unless something unusual is going on, like if I'm saving for a down payment.

While there are small differences in interest rates from one account to another, the differences just aren't that substantial. And, the extra interest I could squeeze out with a change from one account to another would hardly add up to anything. 

Say, for example, I had $20,000 in savings and I made a change from an account paying 4% interest to one paying 4.5% interest. Over the course of a whole year, I'd go from making about $800 in interest to making about $900. And, that's assuming the accounts kept their rates the same for the whole year -- which isn't a given. If the account at 4% ended up raising its rate at any point in the year, then the difference wouldn't even be that substantial. 

To make that extra money, I would have to regularly monitor savings accounts to see which ones had raised their rates and were offering the best deal. I'd have to spend time opening a new account, moving my money over, and deciding what to do about the old account. And, I'd have to change the automated transfers I currently have going into savings.

That's a lot of effort for a little bit of extra money that isn't even guaranteed unless I repeatedly switched my account during the year whenever rates adjusted.

My savings account isn't meant to be an investment

Ultimately, the reality is that my savings account isn't meant to be an investment. I have money in there because I need it to be safe and accessible. Earning a little interest is a bonus, but it's not worth devoting a bunch of time trying to get an extra 0.25% or 0.50% here and there. 

I'm much better off leaving my saved funds where they are in an account paying a reasonable rate -- even if it isn't the absolute best rate -- and focusing on things that will make a far bigger impact on my bottom line.