Here's Why I Don't Spend Time Switching Savings Accounts
KEY POINTS
- Different savings accounts pay different amounts of interest.
- I would have to change my account regularly if I always wanted my money invested in the account that paid the highest rate.
- It isn't worth it for me because I don't treat my savings as an investment -- so I'm not necessarily trying to chase the highest rates.
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.
Our Picks for the Best High-Yield Savings Accounts of 2024
Capital One 360 Performance Savings
APY
4.10%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Sept. 27, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
APY
4.10%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Sept. 27, 2024. Rates are subject to change at any time before or after account opening.
|
Min. to earn
$0
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American Express® High Yield Savings
APY
4.10%
Rate info
4.10% annual percentage yield as of October 4, 2024
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
APY
4.10%
Rate info
4.10% annual percentage yield as of October 4, 2024
|
Min. to earn
$0
|
Discover® Online Savings
APY
4.10%
Min. to earn
$0
Open Account for Discover® Online Savings
On Discover Bank's Secure Website. |
APY
4.10%
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Min. to earn
$0
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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.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
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