Sep 15 2008

Should I chase a 4% interest rate?


My bank just announced it’s offering a 4% APY rate on new money market accounts with a balance of $5k or more. This rate is good for 180 days, and then it will likely change.

The bulk of my emergency fund is parked at ING Direct right now, where it’s earning 3%.

If I move all of it to a new money market account, I could stand to earn an extra $45 in interest over that six-month span. After that, I’d have to reevaluate things and decide where to leave my money.

I’m not sure what I’ll do yet. On the one hand, $45 isn’t that much money. But on the other hand, it would be $45 more than I would have had otherwise. It’s a tank of gas in my car.

What are your thoughts?

Posted under Uncategorized | 9 Comments »

9 Responses to “Should I chase a 4% interest rate?”

  1. If you don’t plan on touching the money then you can look into opening up an ING CD. This way you keep it all in one place.

    I can understand chasing a higher return, after all money is money, but for me it’s not worth keeping track of different accounts for a small % difference. I’ve been using ING for years and have always been happy with them. For a short time I considered opening up a WaMU account. Now I understand they could be in financial trouble. I think I made the right decision to stick with ING.

    FFB’s last blog post..Some Rights Reserved

  2. Since it’s strictly for emergency savings, I don’t want to tie it up in a CD in case I need to get it.

    I already bank at the brick& mortar bank in question, so that’s why I’m considering it. I wouldn’t have to open an account with an entirely new, unfamiliar bank.

  3. Tough call. Sure, the extra $45 or so is tempting, but is earning $7.50 a month worth the hassle of opening a new account, moving your funds, and then possibly moving them back to ING again in 6 months if there’s a drastic decrease in interest? If yes, then go for it!

    Personally, I probably wouldn’t bother. If you’re happy with ING, then it might not be worth all of that just to earn a little extra money. If you don’t think shifting the funds around is a big deal, though, then why not?

    Karen’s last blog post..Be familiar with what your insurance covers, and make sure your doctor is, too

  4. Since you have an existing bank relationship, I would go for it! Why not pick up the extra $$$? Like you said, $45 equals a tank of gas.

    john b’s last blog post..Two More US Financial Titans Fall

  5. I decided to go ahead and transfer it over. I figured since I already have an account with the bank, it would be much simpler.

    In six months, I’ll just check on what the new rates are and go from there.

  6. Some are speculating about another FED rate change which might drop savings rates even lower. Might be a good idea to lock. I’m lazy though.

    PT’s last blog post..Prime Time Money

  7. “Extra” money is always great and since you banked there already, it probably didn’t take much to transfer over. How sad is it, however, that $45 these days is only about as good as a tank of gas, and maybe not even a full one!

    Dani’s last blog post..What’s Pork Got to Do With It?

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

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