When I first started learning about online banking accounts I would often read about the idea of chasing high interest rates and switching bank accounts when a higher rate became available else where. I was sold on the idea because who doesn’t want to earn more money on their money?
I switched my savings accounts a few times and I was sold that this was the way to go when it came to investing money. I went from wondering if I should open a bank account online to wanting to open as many accounts as I could. Then something happened, I realized that interest rates suck with most online savings accounts. This was the catalyst for getting me to stop chasing chasing interest rates with different savings accounts.
Why else do I think that chasing savings account interest rates is a waste of time?
Many interest rates are introductory.
One way that online banks and credit cards get us to switch over is by offering a great introductory offer. Just like all good things, these introductory rates eventually do come to an end. Then you’re pretty much back to where you started. Is it worth switching savings accounts for a small increase for a few months?
Small changes in online banking rates will happen.
Are you going to switch every time that a better interest rate is available to you? I’ve noticed that interest rates change pretty regularly with most online savings accounts. Keeping track of these changes is time consuming enough. I couldn’t imagine trying to switch accounts now that every time a change in rates occurs.
The time invested isn’t worth it.
I find that it’s takes too much time to try to keep up with minor swings in interest rates here and there. The time that you need to invest into this endeavor isn’t worth it if you asked me.
You receive quality service from your current banking account.
When I reviewed ING Direct I mentioned how I love the fact that I can create many different accounts with their own unique name. I’m so happy with my experience with ING Direct that I don’t see the value in switching to another bank for a point of an interest rate.
Now that you know why I don’t care for chasing interest rates with savings accounts there’s another question that needs to be answered: What’s a better way to invest your time and money?
I’ve mentioned the notion of investing in yourself many times here in the past so I won’t dwell on it any further. I will just mention that at the end of the day I see much more value in pouring your money into upgrading your skills then I do in a savings account that pays less than two percent. Whether you choose to spend money on an evening course or for consulting services, I find this to be a much better option for investing your money.
Grow your business.
As you may know by know I’m all about starting a side business and using your existing skills to earn more money. As fun as it is to sit on Facebook all day, I feel much better when I use the internet to generate some money and help others in some way. Your savings can be used to grow your business (theme work to outsourcing certain tasks) instead of sitting around in an account earning pennies a month.
Saving your money in an online savings account paying 1.5% doesn’t sound sexy at all. I mean in an era where promises of quick money and tips to make money fast are thrown out casually, we all want to make money quickly. The way I see it is that I’d rather have my core savings in a steady investment account, while I use another portion of my savings to invest into a little more riskier ventures (my own business ventures).
Where do you save your money?