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Columns | Go Far With Kovar

Interest rate hikes


by Taylor Kovar

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). - Wilder

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. Happy banking!
Taylor Kovar April 27, 2022
More "Go Far With Kovar"
Legal Disclaimer: 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.


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