In late 2007, right before the banking meltdown that ushered in the Great Recession of 2008, we were easily earning north of 4% on money market accounts. As the recession unfolded, and with much help from the Federal Reserve, interest rates plummeted to near zero percent…actually zero percent in many cases. Some ten years later we’ve experienced one of the great bull stock markets in our history.
Bank lending rates have risen with the rising economy but, in many cases, what they are paying on checking and money market accounts have risen only slightly, if at all. For example, my personal checking account pays 0.01%…that’s one-hundredth of one percent! On a $10,000 balance, I’d earn a whopping $1 for the entire year!
How to Get a Better Rate
Why would you guess the banks have left the interest rates they pay their customers so low for so long? The short answer is that customers are not complaining and voting with their feet! Now’s the time to take action and here’s what you should do:
Step 1. Pull out (or pull up) your most recent statement(s) and see what interest rate you are being paid on your various accounts including checking, savings and money market accounts.
Step 2. Compare your rates to the best rates across the country by visiting www.BankRate.com. My quick scan of current rates showed rates as high as 2.5%. That’s still a low rate when compared to 2007 rates, but significantly higher than the 0.01% I’m currently getting at my local bank. After speaking with my banker, they increased my rate to 1.9%…not as high as I could have gotten if I moved my account, but high enough to entice me to stay.
Step 3. You’ll likely find that Internet banking rates are significantly higher. With this information in hand, contact your bank and ask for their best rates while letting them know you’re considering moving. In some cases, they may be able to give you a higher rate than their published rates (especially true with CD rates) and in many cases you’ll have to decide whether to move your accounts or stay put and accept lower rates.
With the ease of internet banking these days, there’s no reason to be tethered to a local bank if they are uncompetitive.