| Hi Taylor:
I'm not one to make panicky moves with how I bank, but I'm wondering
if there's something I should do with my savings in light of the Fed's
recent interest rate hike (and any more increases that might be coming).
Hi Wilder: This is a good thing to be thinking about. Lots of
people fret about buying homes and taking out loans when rates go
up, but it's smart to look at the potential advantages. As far as
your banking goes, there are definitely moves that can be made if
you aren't in love with your current institution. You can start by
seeing if there's an online bank offering higher returns. This isn't
a guarantee, but digital banks are always looking for ways to take
business away from the larger financial institutions that are well
established but have to deal with all sorts of overhead. If you haven't
already, research banks with no physical location to see what kind
of APY you might be able to get. Again, if you love your bank and
like going into an actual building, a slight increase on your interest
payments might not be worth it. Another option - when the Federal
Reserve hikes rates, that has a tendency to lead to more promotional
deals. While you might not find a bank that's going to offer 3% interest
forever, it's possible that some company is offering free checking
or a credit card with great benefits and no annual fee for customers
who sign up before the end of the year.
Banks love higher interest rates, so this is a time when you might
be able to find happy financiers looking to establish new relationships.
Whether you're looking at credit unions, online companies or big corporate
banks, you should be able to find people who want your business.
In many cases, what you're offered by an online bank won't be that
different from what you're getting with a traditional company. It
will depend on the type of account you're looking to open and how
much money you keep in the bank. I'd check around to see what institutions
are offering good APYs, but also make sure the other benefits you
need are available as well. Don't forget about access to ATMs, minimum
deposits, checking fees, etc. A good interest rate can easily be wiped
out if you don't have the other amenities you've come to rely on.
No matter what happens, I think it's always good to look around and
see how you can make the most of your money. It might be that you
can talk to your current banker and rework your terms. You're the
customer and everyone wants your money, so you definitely have leverage.
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.