Ask Chuck: How do we get a better return on our savings?
Dear Chuck,
We like our bank, but we get next to nothing while they hold our money in checking and savings accounts. We need to do better, but we fear moving money to banks we do not really trust. What would you do?
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Looking for a Better Return
Dear Looking for a Better Return,
A December 2021 Bankrate survey found that, on average, customers kept the same savings account for almost 17 years and checking accounts for nearly 18. The main reason is no or low monthly fees. Other reasons are that they have always had the account, they are happy with the customer service, there are convenient branches/ATMs, and it is too much of a hassle to change. This matched our personal profile exactly!
My wife and I recently decided to move some of our savings into short-term CDs to get a better rate. We expressed a desire to our bank that they match competitors’ CD rates. It has been a week since we spoke with our bank, and we are still waiting to hear back. In the meantime, we continue to conduct research.
We also asked if we could earn a better rate on the funds we keep in our savings account. Surprisingly, we were told that since we opened that account at an older branch, if we moved it to the “new” location, closer to our home, we could earn a much higher rate. I wondered, “Why in the world weren’t we told that months/years ago?” Then it dawned on me. It’s our responsibility. The bank will use our money to its advantage and continue to pay the lowest rate possible until questioned. We moved the money electronically from within the same banking system from one location to another, and crazily enough, it now earns us much more interest!
Make a game plan
Set up a meeting at your bank and be prepared with evidence of competitors offering higher rates on similar products. Your bank may be motivated to match it. A physical bank will not be able to compete with rates offered by online banks. You must compare apples to apples: find rates from banks similar to yours. If they are unwilling to raise rates on your savings, see if they will drop some of the service fees on accounts you have with them. If you are a long-time customer, they may be motivated to keep your business. Again, bring proof of lower fees with other banks.
Needless to say, conduct yourself as an ambassador of Christ. Be patient, listen well, and make sure you understand exactly what you are told.
If you are like most consumers, you like having checking and savings accounts at the same bank. Perhaps you are happy at your bank, but they are unwilling to meet the rates offered by competitors. Consider moving some of your money to take advantage of particular products that better meet your needs. Or consider a credit union. If you are unhappy with your current institution, then definitely shop around. Ask friends where they bank and do some online research.
Compare banks
When promotions are offered at other institutions, research the restrictions. Is the annual percentage yield (APY) worth moving your accounts? Here are a few other things to consider:
- Monthly maintenance fees
- Minimum balance requirements
- Transaction limits and penalties
- Automated savings features
- Options for transferring money in and out of the account
- Past account problems like data breaches
- Location (if brick and mortar)
- Customer reviews and online
- FDIC or NCUA insured
Compare CD rates
Check out current CD promotions. Rates vary by terms — the length of time money must remain in the account. For example, a one-year term means the money must remain in the account for one year. This is a good option for locking away money you do not want or need to touch for a certain length of time. Early withdrawal will cost you money, so do not put all your savings into CDs. This can be very beneficial for impulse spenders, low-risk investors, or anyone with a time-specific savings goal. Currently, most CDs pay higher rates than savings or money market accounts, though they do not have the flexibility. Online rates exceed what physical banks can pay. You can ladder them by locking in rates for different periods of time. Here are two resources that might help:
You snooze, you lose
Don’t procrastinate. Get informed and do what you can to protect and grow the money you are entrusted with managing. A wise steward will watch over his/her accounts, not because of fear or greed but because of a desire to maximize what has been provided in order to bless others and take care of future needs.
Be proactive. Proverbs 27:23–24a instructs: “Know well the condition of your flocks, and give attention to your herds, for riches do not last forever …” Flocks and herds were the riches and possessions of people in ancient days. Applying this today encourages you to diligently manage your savings for your good, the Kingdom, and those who will obtain the inheritance.
The Crown God Is Faithful devotional offers inspiring and practical Biblical wisdom. You can subscribe to receive daily devotionals that will help transform your finances and provide much-needed encouragement.
Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Economic Evidence for God?. Be sure to follow Crown on Facebook.
