No doubt about it, bank savings rates are hovering at historic lows – Bankrate.com has the average U.S. savings account currently paying just 0.78%.
While rates are low, however, fees charged by banks are heading the other direction – higher and more numerous. It’s no wonder consumers are getting fed up with banks. But before you make any sudden moves to switch your account to another bank, conduct some due diligence first.
One easy way to tell if your bank is falling off the beam is by measuring its savings rates against those at other banks. All things are not equal, but if you can get a better rate at another bank and not lose any services or pay more in fees, it’s an option worth considering.
Money Talks News has a sister site, InterestMatters.com, that offers a listing of rates on savings accounts, mortgages and other loans. If you don’t think you’re getting a high enough interest rate (or you’re paying too much on your loans), it’s worth your time to compare rates at other institutions.
Compare fees, too
With Congress acting to stop banks from automatically charging consumers for things like overdraft protection (see our story Time to Choose: Declined Card or Overdraft Fee), banks are looking for other ways to separate you from your money. One way is to start charging monthly fees for not maintaining a minimum balance in your savings and/or checking account. Another is to charge a monthly fee for taking too much money out of your savings account or making frequent withdrawals. So be aware of stealth fees as you shop – more interest on your savings account doesn’t count for much when it’s more than offset by higher fees on your checking account.
If you switch, watch your credit score
If you decide to switch banks, depending on the type of account you open, your new bank may subject you to what’s called in the industry as a “hard credit pull” – basically pulling your credit score. While that’s not normally a problem, if you happen to be negotiating a new home loan or you’re shopping for a new car, that credit check could temporarily lower your credit score – and make it harder to borrow at the best rates and terms on that new home or set of wheels.
The bottom line
Thanks to rate search websites, finding a better rate on a savings or checking account has never been easier. Transferring your accounts can also be easy. Just make sure that you get your money’s worth by checking not just rates, but other things that are important to you, like fees and customer service.
And don’t forget small local banks and credit unions. They may not show up within the national listings of sites like InterestMatters.com, but they still may offer great deals.
For more information on hassle-free switching see Hate Your Bank? Three Steps to Ditch ‘Em.