Savings rates are notoriously low at banks these days, but some of them will offer a "high interest" rate of a whopping one per cent. As someone with a high interest savings account, I can tell you: It's not that big of a deal. Here's why. Photo by Andrew Watson
Sometimes switching banks is a good idea, especially if you're getting gouged with fees and terrible customer service. It can also be a pain, though, so you probably don't want to switch just because a bank has a one per cent interest rate.
For one, that interest rate is usually only valid for customers who have a certain amount saved in the account. Plus, as Refinery29 points out, you shouldn't have that much saved in the account to begin with:
You can earn interest and still lose money. Here's why: Inflation averages 3% a year, so even at the best online banks that pay 1% interest, you're still losing 2% each year. In order to minimise your loss, you want to keep no more than your emergency fund and short-term savings...
To put the numbers into perspective, if you keep a daily balance of $6000 in an account that earns one per cent interest, you'll pocket about $60 for the year. That's a whopping $5 a month. This sort of falls in line with pinching pennies instead of looking at larger expenses. Sure, the small stuff adds up, but it's a much smarter financial move to park your savings in a better spot. For more, head to their full post at the link below.
29 Money Misunderstandings That Are Losing You $$ [Refinery29]