3 reasons to change banks even when you get a good interest rate on your savings

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Key points

• While your bank may be paying a good interest rate, perhaps another bank is paying even more.
• You might even switch banks if you can open a CD with more favorable terms and gain access to superior customer service.

Banking is one of those things that you tend to get used to. If you’ve had your money in the same bank for many years, it can be hard to push yourself to change. This is especially true if your bank is paying a pretty good interest rate on yours savings account Right now.

But even if you’re happy with the rate you’re getting, switching to a new bank could still work to your advantage. Here are some of the reasons why a change might make sense.

1. You can get a higher interest rate elsewhere

Maybe your bank is paying 3.75% on savings accounts right now. But if there’s another bank offering 4.25% on your money, moving could mean you earn a lot more interest.

Let’s say you have $20,000 in savings. An extra 0.5% in interest means walking away with another $100 over the course of a year, all for doing virtually nothing. So you shouldn’t necessarily let your familiarity with your current bank keep you from making more money at another.

2. You can subscribe to a CD whose penalties for cashing in early aren’t that severe

CD rates they tend to be higher than savings account rates because you’re required to commit to keeping your money in the bank for a set amount of time. It could be six months, 12 months, two years or more.

When it comes to the principal amount of money you put into a CD, there is no risk in opening one as long as your deposit does not exceed $250,000 and your bank is FDIC insured. However, you run the risk of having to cash out your CD before it expires. Go this route and you will likely face a fine, the size of which will depend on your bank.

Capital One, for example, charges a three-month interest penalty for cashing in early on a CD when its term is 12 months or less. And your bank may have a similar policy. But if you can find a bank that offers a lower fee for cashing in a CD early, then it might be worth it to transfer your money.

3. You hope for better customer service

Whether you ask your bank for help occasionally or frequently, it should be a good experience from start to finish. If your bank doesn’t offer such great customer service, it doesn’t matter if they’re paying a good rate of interest on your savings. You still deserve to be able to walk in or answer the phone and have an efficient, pleasant and helpful interaction with the person assigned to assist you. Period.

Switching from one bank to another can be a jarring experience if you’ve been banking at the same institution for many years. But if these situations apply to you, it might be worth making a change. And remember, you tend to get used to that change over time, even if it initially feels weird to be banking elsewhere.

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