What's Your Rate?
When was the last time you checked on any of your financial rates, including those for savings accounts, mortgages, home equity loans, credit cards or even CD’s? If it’s been awhile, you may be leaving money on the table.
With the Fed raising rates over the last few years, we’ve seen banks react by correspondingly raising rates for the products they are offering, but each has done so at their own pace. While your primary bank may be offering the best rate on a mortgage loan, they may not be offering the best interest rate on your savings account. If you are comfortable banking with more than one institution, there is certainly opportunity out there to shop around for the best deals. Bankrate.com is a fantastic resource available that can help you compare your current rates and see just how much you might be missing out on.
How much is the bank paying you in interest?
One area in particular where you may be able to pick up a better rate would be your savings account. If you currently have your emergency fund and any additional cash savings held at a traditional brick and mortar bank, you very likely can find a better rate by moving to an online savings account. If you go with one of the banks listed at Bankrate.com, just keep an eye on if they have any minimum account balances or fees tied to their accounts. Not all of them do, but it is always good to be on the lookout for them when signing up. Since it could be easy to feel overwhelmed by the complete list on Bankrate.com, a few banks that stand out with no account minimums or fees would be Ally, Discover, Barclays, Synchrony, and American Express. At the time of writing, they are all offering Annual Percentage Yields of 2.1% or more.
Even if you don’t want to completely move over to an online savings account, you could opt to continue with your current bank but put a cap on what you’ll keep in these accounts. For instance, you could keep your day to day operating funds and perhaps even a portion of your emergency fund in place. Anything above and beyond that amount, perhaps savings for a short-term goal, could be moved to the online savings account to pick up a better interest rate.
How much are you paying banks in interest?
While it is good to keep an eye on what banks are paying you in interest for your savings, it is also good to keep an eye on what they are charging. If you have any type of loan outstanding, it is worth watching the Annual Percentage Rate as you may be able to refinance and save on monthly costs if the rates go down. Even though the Fed has been raising rates, and in general most APRs have gone up on all loans, it doesn’t mean that opportunities aren’t out there. For example, in 2018 the Fed raised rates four times. Yet, in looking at longer term financing like a 30-year fixed rate mortgage, the rates actually went down in December as compared to prior months according to FreddieMac. While rates have started to climb again in January, it does go to show that there are windows of opportunity for those that are watching.
Another method to keep your rates down is simply asking for a lower rate. While it is not a bullet proof method, it certainly can’t hurt to call your credit card company or loan provider and ask for a lower rate. During the call, you can mention being a loyal customer, perhaps always paying on time or even bring up the better rates being offered elsewhere. The worst they can say is no, and in that case, head back to Bankrate.com and compare the loan or credit card you are using and see what else may be available. While it may seem like a hassle to go through the paperwork and process to switch, the savings from doing so can certainly add up.
Have any questions? Send me an email at JFlaherty@vantagefinancial.com and I’d be happy to help.
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