Penny Seeds

It’s always a cat and mouse game to get the best interest rates. Don’t just believe whatever your local banker tells you. They’re getting paid to secure your investment! Just because they say that’s the best rate available doesn’t mean it is.

I surprised a bank employee who was trying to get me to get into an investment account when I told her how I’d calculated out how breaking a CD, taking a penalty, and moving to another bank would actually save me money. Since I was infact paying off a car loan, and investing in a new CD that would be several points higher than what they were offering. It pays to do your home work.

Sometimes you may have to go beyond your home town to get the best rates though! My local bank of choice has been Sun Trust partly because of the abundence of free ATMs, but mostly because at the time they were offering me a very attractive CD rate. Since then their numbers have reached almost painful lows. They were offering my something in the 2% range some months ago, and I told them no thanks.

I moved my cash investment to Capital One, and got a much more attractive 5.50% - since I’ve locked in my rate their tiers have dropped significantly too. I also had a nice High Yield Savings for 4% that has since took a tumble.

I still believe the best deals are online, and I’m even pondering an elaborate strategy of bouncing money from one account to the other when the return gets too low to bare it anymore.

The amount of time you plan to invest, and the amount of money you have typically effect the outcome of your interest rate. Gmac is looking promising, but no clue how long they’ll hold that position. I’m looking into an account with them as I’m no longer impressed with Capital One.

Savings Accounts

Capital One - 3 % * On balances over $10k (I’d just invest that amount in a CD for higher return..)

GMAC - 3.20 % (Starting at $500)

At first glance it doesn’t seem like a big deal, but if you read the fine print you’ll see that any investment under $10,000 will only garner you a 1.5% interest rate.. ouch.

Certificate Of Deposits

Again the differences aren’t apparent until you read the fine print, and compare the amount of time you have to invest, and amount of cash you have to put in to the rate you’ll be getting.

Capital One - 4.00% (Minimum $5,000 deposit, and a term of 5 years)

GMAC - 4.00% (Minimum of $500, and a term of 5 years)

Capital One’s highest rate is actually 4.75%, but you’ll have to invest for an additional 5 years to get that extra bit! Gmac has much better deals for shorter term CDs or people without a lot to invest.

12 months - 3.75%

18 months - 3.50%

2 years - 3.65%

If you noticed the fee tiers shrink a bit when you get into certain date ranges. I would presume that’s supposed to make you hand over your money for the longest amount of time since it offers the most attractive rate.

I will say Capital One has an interesting account that I haven’t tried yet. It offers a lower interest rate than their main account, but also gives you rewards for savings instead of spending. Though, since I never got anything in the way of rewards from their credit cards I asssumed their saving account would be the same way, and took a higher interest rate instead. If anybody has tried this account I’d love to hear how it went for you though!

Banks are being stingy with their interest rates, and you’re going to have to bum around for the deal that works best for you. If all of this seems like too much work you might want to go with a longer CD term if you don’t need your money for too long. Be careful in calculating though or you’ll have to pay a fee to get your funds. I think CDs are a good balance of stablity, and liquid funds personally. Some people need that lingering ‘penalty’ to keep them from spending up their savings on every whim! My Uncle comes to mind - He told his family they’d be having a cheap Christmas, and then he bought a boat.

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While it seems like a good deal you really might be doing yourself more harm than good to get a lower rate. A high interest rate can cost you lots of cash every month, but a lower one might cost you more in the long term.

Credit card companies are getting all kinds of hell rained down on them for their recent rate hiking actions. People are furious that they’re rates are being  jacked up sometimes three times what they were for no reason. Guess what! They don’t need a reason to raise your rate.

If you’re constantly late, over limit, ect. that might give them the heads up that they need to raise your rate to get rid of you or suck out some more cash because you’re a ‘higher liability’, but they can do it anytime!

Many people are calling their issuer to get a lower rate, and I thought about that for a few minutes before I decided it was pointless! If I was guaranteed that lower rate for any amount of time; then yes it would be a great plan for me! If I had thousands upon thousands of dollars of debt I could potentially save a lot of money.

However, the fact is they could raise it double next month if they wanted to do so. That doesn’t seem very secure to me, and it could be very dangerous for you. The less something has a financial impact on you the more trivial it becomes in your mind, but imagine this scenario.

Let’s say you have an unattractive rate of 18% on your current card. You call up your credit card company, and spend a good hour complaining until they knock you down to a 12% rate to get you off the phone. Great! You think to yourself, and proceed to hand out your plastic to ever retailer in town.

A couple months later your card issuers sees that you have acquired a good amount of debt thanks to your lower rate, and decide to put you up in to a 25% interest rate. This number sounds unreasonable, but it’s not an exaggeration. I recently went to a rate comparison site, and one of the ‘comparable’ rates was a card with a whopping 39% interest rate on it! That’s the ‘low’ one they were advertising - So imagine what they charge some people!

I decided that having a lower interest rate would just encourage me to keep money on my cards, and that’s not what they’re for! I keep credit cards around to boost my rating, and for emergencies. (Car repairs, ect.)

Ultimately you want zero dollars on your credit card. That means no interest money for greedy creditors; so who cares if they up my rate to 75%? I just won’t give them any money.

Instead of a getting a better rate to keep yourself in debt - Spend that time shopping around for bigger returns on your savings, CDs, stocks,  retirement fund, ect.

If you owe a lot of money already go ahead, and get the best rate you can, but don’t slack! Pay that balance off as fast as you can. Spending money that isn’t yours is dangerous - And millions of people are in trouble because of it. Keep your cards to..

*Raise your credit score.

*For emergencies

*Rewards programs (But pay it off before you owe more than you bought!)

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