Don’t chase the highest yield

May 7, 2008

In these times of low interest rates, those of us that actually save money are having a hard time with our not-so-high-anymore yield accounts.

I remember a year ago when some savings accounts were yielding 5%.

I used to chase them. I had an account at ING yielding somewhere around 4.65%. I chased a higher yield and opened an account at Citi (5.05%) and then later at E-Trade when it offered the 5% yield I wanted while Citi lowered theirs.

It wasn’t worth chasing the highest yield. Now I have 3 savings accounts to manage and monitor.

A year later, ING (out of my 3 saving accounts) is actually the one with the highest yield now.

Consumerist.com (a favorite site of mine) lists current high yield savings accounts with their rates.

The bottom line is: open a high yield savings account, but don’t make the rate your main criteria. Pick a bank that you’re comfortable with, that provides good customer service and a great online experience (security, online statements, bill pay, etc).

Most likely, in a year, the bank currently giving the highest yield won’t be the top one anymore.

Furthermore, the difference you will be giving up (probably less than 1%) will be such a small difference (3.6% @ OneUnited vs my 3% @ ING) and won’t be worth chasing it.

Posted in Consumer, Finances