Rate Chasers
As I've mentioned before, I read a lot of personal finance blogs. In the last few weeks, I've seen a lot of people say that since has dropped their interest rate, they're moving their money somewhere else. From a mathematical standpoint, that makes some sense. I mean, if you can get an extra half a percent on your savings account, and it's fairly large, it might make a significant difference in your earnings over the course of the year.
However, there are other considerations, at least for me. I don't keep amounts in excess of $10,000 in savings very often. A half percentage point in interest is only $50 over the course of the year, ignoring compounding, so it isn't really worth it to me to go through the hassle of switching banks every time I find a slightly better deal or when my bank lowers its rate. I move money around electronically, and having a reliable system in place is worth more to me than that.
I've used Etrade's "high interest" savings account for quite a few years now, and their rates have generally been competitive. If their rate goes down, I know that pretty much everyone else in the market either has already dropped or will soon drop rates to something close to the same. I keep a portion of my emergency fund there, but I also use it as a pass-through account to make investments in stocks and mutual funds. The simplicity of having a single place to go for all my money, except for the checking account, really makes the most sense for me. I almost wish that my retirement funds were invested there, too, because between the IRAs and 401Ks, I have to look in four more places to get current information. There is something to be said, however, in these days of failing financial institutions, for not having all your eggs in one basket. As long as it's all working, I ain't gonna try to fix it.
It does require a lot of maintenance on my part, but if I want to see the total picture in one spot, I use MS Money. I keep it pretty much up to date, at least on a monthly basis (checking and credit card stuff is updated at a minimum weekly).
However, there are other considerations, at least for me. I don't keep amounts in excess of $10,000 in savings very often. A half percentage point in interest is only $50 over the course of the year, ignoring compounding, so it isn't really worth it to me to go through the hassle of switching banks every time I find a slightly better deal or when my bank lowers its rate. I move money around electronically, and having a reliable system in place is worth more to me than that.
I've used Etrade's "high interest" savings account for quite a few years now, and their rates have generally been competitive. If their rate goes down, I know that pretty much everyone else in the market either has already dropped or will soon drop rates to something close to the same. I keep a portion of my emergency fund there, but I also use it as a pass-through account to make investments in stocks and mutual funds. The simplicity of having a single place to go for all my money, except for the checking account, really makes the most sense for me. I almost wish that my retirement funds were invested there, too, because between the IRAs and 401Ks, I have to look in four more places to get current information. There is something to be said, however, in these days of failing financial institutions, for not having all your eggs in one basket. As long as it's all working, I ain't gonna try to fix it.
It does require a lot of maintenance on my part, but if I want to see the total picture in one spot, I use MS Money. I keep it pretty much up to date, at least on a monthly basis (checking and credit card stuff is updated at a minimum weekly).