The rash of unfamiliar banks touting their excellent interest rates of different type of accounts has some consumers wondering if they should make a switch. While there is certainly the possibility that moving your accounts to a new institution would allow you to earn more interest on your savings while trimming costs for other bank services, it is important to look below the surface before making any changes.
One important factor is understanding how that interest rate is applied. What many consumers do not know is that institutions all over the world use one of two standards for that annual interest rate: 360 or 365 days. Depending on how your current bank calculates and applies the interest, and how the bank you are considering goes about the task, that attractive interest rate may not be so attractive after all. While this does not make much of a difference for many people who have relatively small balances, those who have substantial amounts in their bank accounts may find that they fare better with their current bank.
Also consider other fees and charges associated with other bank services you utilise with some frequency. While some services may carry lower fees, others may be higher. The end result is that paying higher fees for some important services may offset any reductions in costs for other services. This effectively making the effort to switch fruitless.
Make it a point compare other institutions point by point with your current bank. Doing so will help you determine if making a change is in your best interests, or if keeping your accounts as they are would be the best strategy.
Tags: bank accounts
