Shopping Your Rates is Critical: Here’s How

Most people will shop around for things like groceries or gas, but rarely will they do the same thing when it comes to interest rates. Huge bummer. Because while saving a few cents on the stuff you buy is never a bad idea, earning more when you save and paying less when you borrow can be a game changer.

Check it out: say you’re currently earning .1% on your $10,000 savings account. Keep that up for 20 years and you’ll earn a total of 200 measly bucks in interest. Now say that you spend five minutes and shop around to earn 3% instead of .1%. After 20 years you’ll have earned $8,200. That’s an extra 8 grand on a virtually identical account with almost no additional effort. It’s called making your money work as hard for you as you do for it.

And when you borrow, shopping is even more important. If you pay 5% on a $200,000 thirty-year mortgage instead of 6% you’ll save yourself more than $45,000 over the life of the loan. 

Kind of makes using a coupon at the grocery store peanuts, doesn’t it? That’s why shopping rates is so important: and thanks to the web it’s simple. Below we list more than 50 sites that can help you compare rates on everything from savings accounts to car loans. But before you head off there, there are two things you should know. First, no site has every possible deal on every possible rate. You might be able to find a better one at a local credit union or other source.

Second, although there may be dozens of sites to help you find rates, they all offer the exact same stuff because there are only a couple of sources for this type of nationwide rate information. So basically every site has the same stuff within a different design. And since that’s true, I’d really appreciate you using ours: interestmatters.com. Your results will be just as good, and you’ll be doing me a favor.

But however you shop, shop. Doing anything else is simply donating money to a bank that probably has enough already.

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Comments & discussion

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  • http://www.bankwest.com.au/Personal/Savings_and_Investment/index.aspx Allen Deas

    I agree you savings accounts are just like any other product and you do need to shop around for the best interest rate. I found a bank that pays 5.5% on my savings account. Its bankwest based in Australia.

  • Eugene

    I didn’t get the math. How did anybody, who wrote this article came up with $200 on $10,000 with 1% for 20 years??? Another bummer even funnier than the previous one is $8,200 under 3% under the same terms??? It’s not even an error in one number using simple interest. It’s a random number!!!

    • http://www.moneytalksnews.com Dan

      Interest compounds every year, so you can’t just calculate .1% (not one percent, but point one percent) of $10,000 and multiply the result by 10… You have to add the interest to the principle every year (typically how banks pay out) and then multiply that by .1%.

      Here’s a great article on wikipedia that explains it in more depth: http://en.wikipedia.org/wiki/Compound_interest

      And here’s an online calculator you can use to compute your own compound interest scenarios: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

      • Eugene

        Dan, true, I didn’t notice a point between “1%”… However, you are right: the banks compound interest, which is still not $200 dollars at the end of 20 years, and that’s what I was basically talking about in the first place. For the second one, unless I again missed a point somewhere, the result doesn’t add up to $8,200.