Switch Accounts for a Better Yield?

Interest rates on savings accounts often fluctuate, making the hunt for the highest yield on your savings stash a cat-and-mouse game. If your account’s yield falls, is it worth switching to a different account offering a better rate? After all, the new account’s yield could drop at any time, too.

Doing some math can help you make the call. Say you have $10,000 in a savings account with a rate that recently dropped to 0.4%. Over the next year, you’ll earn about $40 in interest if the rate remains steady. If you move the money to an account yielding 0.7% — one of the top rates available recently — you’ll earn about $70 in interest over a year, or $30 more, if the yield stays the same (but that’s a big if).

If you hold a bigger balance, switching becomes more compelling. “The more you have in the savings account, the larger the difference, and that can make even a small rate advantage worthwhile,” says Ken Tumin, of DepositAccounts.com. Using the example above but with a $50,000 balance, you’d earn about $150 more in interest by moving your money to the higher-yielding account. With a $100,000 balance, the difference is about $300. You can run the numbers by visiting Investor.gov, hovering over the “Financial Tools & Calculators” tab and selecting “Compound Interest Calculator.”

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Look for consistency. Accounts that have reliably offered strong yields in the past are more likely to continue providing above-average rates than those that occasionally dangle chart-topping yields to attract customers. To see a list of the highest-yielding accounts in your area, visit Depositaccounts. For each account, you can click on “Details” to see its rate history. Tumin notes that in an index of 10 well-established online savings accounts that DepositAccounts tracks, the no-fee accounts from Live Oak Bank (0.6% yield), SFGI Direct (0.56% yield) and Synchrony (0.55% yield) recently offered rates higher than the index average of 0.49%, and they’ve had above-average rates for the past three and a half years, too.