MoneyMerc

Nooo!

Ok… so we aren’t talking about bridges or anything, despite this crazy picture…

We are talking about “jumping” savings accounts to take advantage of better rates. Granted, high savings accounts rates these days are slim pickin’s, but you can tell from the font size of %-rates in newspapers how much banks want to win your money. Does it make sense to switch?

It depends on the rate difference. Here’s my current situation:

I have an ING Savings account – APY 3.00%. HSBC is currently offering 3.50%. Should I open an HSBC account and move my savings there? When you are talking about a measly 3%, 0.5% sounds like a lot. Let’s do some quick math…

First, let’s check the rate we are using. Banks vary their compounding method (daily, monthly, etc) which means APR’s are not all created equal. Luckily for unwitting consumers, if you look at APY this is your rate considering compounding. So it’s apples to apples. Plus you can use it to easily calculate how much interest you’ll earn if you invest your moo-la for a whole year:

[your money now] x (1+APY) = [your money later]

Say I have $5000 saved in ING. At the end of the year, I’ll have 5000 x 1.03 = $5150.
If I put that in HSBC, I’d have $5175…. $25 difference! And if I’m in the 28% tax bracket, it’s really $18.

Is it worth jumping? I’ll let you be the judge – for me, the simplicity of a small number of accounts (with statements) and time savings of not tracking rates all the time is well worth that small loss.