Why You Should Get a Life & Stop Chasing Interest Rates

by Martin

Do you chase interest rates? Are you looking for the highest interest rate possible for your savings account? I used to chase interest rates. Now I’m a happy customer with ING Direct.

I recently got a letter in the mail about an inactive online savings account. I totally forgot about this account and it went inactive. The reason that I

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even signed up for the account was because they offered a higher interest rate by a tiny percentage and a $20 sign up bonus. After logging in a few times I realized that the service was sub-par and that I couldn’t easily use the online banking feature. This simply wasn’t the best online banking account for me.

Before this experience I was hesitant to join ING Direct because of the lower interest rate. After my poor experience with the other bank account and based on the recommendation of my blogging peers, I joined ING Direct and have been with the company ever since.

Along the way I learned that it just wasn’t worth chasing interest rates. It may sound sexy at first to go after a higher rate on your savings account, but it’s really not that big of a deal in the grand scheme of things. I no longer worry about interest rate changes on my savings account and I wanted to share why you shouldn’t care either.

Why should you stop chasing interest rates with bank accounts?

There are better investments out there.

I find that there are many better investments out there than a savings account. It makes sense to get a competitive rate for your hard earned money. It doesn’t make sense to only keep your money in a basic savings account.

What are three better investments than a savings account?
  • Education.
  • Unique experiences.
  • Real estate.
As you can see, you can easily find a better investment tool out there than a savings account.

The user experience is more important.

This might sound a bit odd but I actually care about the user experience much more than I do about the interest rate. I want to be able to access my account from my laptop or cell phone and make moves with my money with ease. I do this all of the time with my online banking right now. I often create sub-accounts just to save for my various financial goals.

Most decent interest rate offers are temporary.

When I first covered the idea of chasing interest rates, I figured out that most higher rates are simply introductory offers. For young investors, introductory rates are simply not worth switching bank accounts for because you’ll only get that rate for a certain amount of time. Then it’s back to the original rate, which will likely be similar to the rate that you had with your old savings account. Why bother switching for a temporary spike in interest?

There’s always going to be fluctuations in interest rates.

When I tried to find the best online bank account I realized that rates will always fluctuate. Interest rates are simply not impressive at the moment for those of us looking to keep our money in a savings account. The rates could go lower. The rates could go higher. What’s guaranteed is that rates will fluctuate.

Don’t you have better things to do with your time?

When I hear friends talking about interest rates and complex financial strategies, I wonder if they have a life. I would rather spend my time on growing my business, improving myself, and hanging out with awesome people than worrying about banking accounts.

Those are my thoughts on chasing banking rates. There are bigger battles to fight in the financial world. Why waste your time on this? I believe that you should find a bank that you’re happy with and move on with your life.

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{ 3 comments… read them below or add one }

1 MoneySmartGuides

I found this to be true as well. I used to chase rates. After a while, I realized that many of the bank just increase the interest rate for a short period in hopes of gaining new customers, namely me. Then after a few months, they will slowly decrease the rate, hoping you don’t notice or if you do, are lazy enough to not care and leave your money with them anyways.

I use ING and am perfectly fine with the interest rate they offer. It may not always be the highest, but like you said, there are other things I can concentrate on that will get me a much higher return on my money than switching banks to earn an additional 0.20% interest.

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2 TekGems

I don’t chase interest rates, but I do chase sign-up bonuses. They offer a far better return for the little amount of work you have to do. Once your requirements are filled, you can withdraw and use that money to sign-up with another bank. I’ve made more “interest” this way than parking my money with a specific bank.

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3 Vincent

I prefer to have a non-interest bearing account with no fees. The money you make on interest has to be claimed on your tax return and since the amount is so small I prefer not to deal with that. Truthfully I try to keep a very small amount of money in the bank and keep my life more private.

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