Switch Accounts for a Better Yield?
If your current account has a reliable history of strong yields, it might be worth sticking around.
Interest rates on savings accounts often fluctuate, making the hunt for the highest yield on your savings stash a cat-and-mouse game. If your account’s yield falls, is it worth switching to a different account offering a better rate? After all, the new account’s yield could drop at any time, too.
Doing some math can help you make the call. Say you have $10,000 in a savings account with a rate that recently dropped to 0.4%. Over the next year, you’ll earn about $40 in interest if the rate remains steady. If you move the money to an account yielding 0.7% — one of the top rates available recently — you’ll earn about $70 in interest over a year, or $30 more, if the yield stays the same (but that’s a big if).
If you hold a bigger balance, switching becomes more compelling. “The more you have in the savings account, the larger the difference, and that can make even a small rate advantage worthwhile,” says Ken Tumin, of DepositAccounts.com. Using the example above but with a $50,000 balance, you’d earn about $150 more in interest by moving your money to the higher-yielding account. With a $100,000 balance, the difference is about $300. You can run the numbers by visiting Investor.gov, hovering over the “Financial Tools & Calculators” tab and selecting “Compound Interest Calculator.”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Look for consistency. Accounts that have reliably offered strong yields in the past are more likely to continue providing above-average rates than those that occasionally dangle chart-topping yields to attract customers. To see a list of the highest-yielding accounts in your area, visit Depositaccounts. For each account, you can click on “Details” to see its rate history. Tumin notes that in an index of 10 well-established online savings accounts that DepositAccounts tracks, the no-fee accounts from Live Oak Bank (0.6% yield), SFGI Direct (0.56% yield) and Synchrony (0.55% yield) recently offered rates higher than the index average of 0.49%, and they’ve had above-average rates for the past three and a half years, too.
Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.
-
Six Ways Women Can Overcome Any Financial Obstacles Holding Them Back
To improve your financial situation, focus on empowering yourself first.
By Kiplinger Advisor Collective Published
-
Should You Enroll in Medicare if You Still Have a Job?
This question is being asked more than ever these days, so here’s what you can do when it comes to making Medicare decisions while you’re still working.
By Jae W. Oh Published
-
403(b) Contribution Limits for 2024
retirement plans Teachers and nonprofit workers can contribute more to a 403(b) retirement plan in 2024 than they could in 2023.
By Jackie Stewart Published
-
Roth IRA Contribution Limits for 2024
Roth IRAs Roth IRA contribution limits have gone up for 2024. Here's what you need to know.
By Jackie Stewart Published
-
7 Things Medicare Doesn’t Cover
Healthy Living on a Budget Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. But Medicare Advantage has problems, too.
By Donna LeValley Last updated
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
-
Five Ways to a Cheap Last-Minute Vacation
Travel Procrastinator? No matter. You can pull off a fun and memorable getaway on a moment's notice — without breaking the bank.
By Vaishali Varu Last updated
-
How Much Life Insurance Do You Need?
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
By Kimberly Lankford Published
-
When Is Amazon Prime Day?
Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
By Bob Niedt Last updated
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published