I know. I know. It’s painful to see your money sitting in that savings account earning virtually nothing. You’d really like to earn more, or at least something. Anything at all to make that money work as hard as you did to save it. Trust me. I know. I feel the exact same way.
But here’s the harsh truth: you need to stop worrying about the interest rate on your savings account.
You need to stop feeling like it’s not doing anything for you. You need to stop looking for the new savings account with the better interest rate. You need to stop wondering if you could eek out just a little more return if you could just find the right tactic. You need to stop. Because the more you worry about it, the harder it is to actually reach your financial goals.
Here’s what you should be doing instead.
You Wouldn’t Earn That Much Anyways
Let’s say you have $10,000 your savings account.
First off, nice work! That’s a lot more than most people.
Now let’s say you have the opportunity to switch savings accounts and earn an extra 0.10%. How much extra money will that earn you?
That will earn you $10 per year.
Even if you can find an interest rate that’s a whopping 1% better than your current savings account, that still only gets you an extra $100 per year.
Life changing? No.
So before you invest a lot of time trying to find a better interest rate, remind yourself that even if you’re successful the impact will almost certainly be very small.
Keep the Goal in Mind
A savings account is not meant to make you rich. That’s what your long-term investments are for.
A savings account is for money that you need to know will be there no matter what.
This is an incredibly important purpose! Whether it’s an unexpected car repair, a temporary job loss, or next summer’s family vacation, there are many big life events where certainty is more important than anything else.
And no matter what the interest rate is, every single savings account serves this purpose.
So, What Should You Do?
Instead of spending a ton of time stressing out about your interest rate, here’s what I would recommend.
1. Pick a “Good Enough” Savings Account
I certainly don’t think you should ignore interest rates completely. Since you have the option, you might as well earn something on all that money you’re saving.
Use our tool to find a savings account with a competitive interest rate, minimal fees, and easy access to your accounts.
Don’t worry about finding the best rate. Just find one that’s reasonably competitive and easy to use and move on.
2. Focus on Saving
The truth is that your savings rate will have a much bigger impact on your ability to reach your goals than your interest rate.
This is especially true with short-term goals. The sooner you want the money, the more important your savings rate is and the less important your interest rate.
So instead of spending your time trying to find a better interest rate, spend it figuring out how to save more money. That could mean finding ways to increase your income. Or it could mean finding creative ways to reduce your spending. However you do it, increasing your savings rate is the real key to long-term financial success.
3. Get on with Your Life
Get to work on your other financial goals. Spend time with friends and family. Travel. Do work that matters.
As long as your bank maintains a reasonably competitive interest rate and you’re happy with the service, there’s really no reason to change.
So you can stop worrying about it.