Savings accounts do not attract high interest rates

All of us wish to earn the highest interest rates possible when we deposit our money into a savings account.  But it is not just about interest rates as there are other factors that need to be considered as well.  Like with most financial decisions there are many pros and cons of tracking down the best interest rates on savings accounts.  Almost all financial experts agree that the interest rate is the real starting point in choosing a bank or opening a savings account.

The online banks are the ones that typically offer a higher rate of interest.  This is due to the fact that the operational costs are much lesser than their other counterparts.  Hence, these online banks can afford to pay their clients higher interest rates.  However, one must still check to see if this actually holds good before deciding which bank is offering a better rate of interest.

If you observe that the interest that you are being offered on your current savings account is lesser than the current market rates then it may be time to switch over.  However, there is a word of caution from financial experts and they say it is not right to keep switching over continuously from one savings account to another just because of a difference in interest rates because the difference is not too much.  The time and effort involved in switching over from one savings account to another constantly is not worth it.  Earning more money by merely switching from one account to another is not the solution as there are plenty of other viable options where one can have other alternatives that will help earn even more.  The other options are putting in more hours of work or making a budget and sticking to it and not overshooting the budget.  But on the other hand, if the money is allowed to stagnate in one low-interest bearing account for a long period of time, then money is actually lost in the long run.  It is wise to make a comparison of interest rates at least once a year, in the market and see what your savings account is earning for you.

There are also other alternatives to savings accounts such as the certificates of deposits or CD’s.  Money market accounts are also another feasible option where you can earn a better rate of interest while having access to the funds.