It’s time to increase passive income by changing banks. Back when I started with an online bank, I signed up for OrangeING and the interest rate was great. I’ve parked my money there for a long time and over that time the interest rate had declined. OrangeING was bought out by Capital One and though the level of service that I appreciated from OrangeING has remained the same, the interest rate is now lacking. I understood why it went so low after the great recession but now it’s been over 10 years since then and I kinda feel like I’m getting screwed on the interest rate. So, I’m moving the savings over to Ally.
Ally’s interest rate on savings is 2.2% where Capital One is only giving me 1%. Is it worth moving my money by 1.2% more? Let’s do some quick math. Let’s use $1,000 as an example because it’s an easy round number and we don’t need to break out a calculator. With Capital One the amount of interest in a year would be $10 and with Ally, the interest would be $22. So, if I only had $1,000 in savings, I’m now instantly making an extra dollar per month of passive income just for switching to a different bank.
I also see that the interest rates for IRAs are also much better than what I’ve been getting with Capital One so I’m now planning on moving my IRAs as well.
How about CDs? Well, I don’t typically keep CDs because the
interest rates are so low but after more investigation, I found that the 12-month
CDs (at 2.75%) with Ally pay better than all the other term lengths save the 5-year
CD which pays 3.1%.
As you can see, by moving all my money from Capital One to Ally I’m more than doubling my interest on my savings and increasing my passive income from bank interest to about $16/mo.
So obvious, increase passive income by changing banks
Right, it seems like an obvious move. I’ve lost so much
money from not taking this opportunity. Why didn’t I do it before? Simple
complacency. I’d heard that Ally paid a better interest rate but I didn’t really
know if they were well established, or how much work it would take to get my
money over there, etc. I just didn’t take the time to go through the hassle of
moving my assets to another bank. Well, now it looks like something that will
Moving banks is not something I like to do regularly but
once in a while, it has to be done. Don’t be afraid to have multiple accounts with
different banks or other financial institutions to get the right mix of
financial products that will maximize your money.
Am I leaving Capital One completely? No, not completely. I still have two credit cards with them that I like so I’ll keep those but my savings accounts will definitely be going. I’ll also continue to use my Capital One checking account because it has a better interest rate than Ally’s.
How do I keep track of them?
I’ve been using Mint.com as a financial aggregator for over
a decade now and it’s been great. I’ve also started using PersonalCapital recently.
I like different aspects of each. Mint’s easy to use and lets me investigate my
finances and I think it works better with my banks. However, if PersonalCapital
worked better with my banks so that I didn’t have to receive texts and enter
pins from my banks just to update, I’d probably switch over. I also like that
PersonalCapital is willing to give me a call and do a quick checkup on my
finances with me. I received a call one day from PersonalCapital and had a
quick chat. The advisor questioned me on why my above average liquidity and
explained that it was a compromise with my wife and that I would normally
prefer to have that money invested where it could be making more money.
Anyways, these financial aggregators help me keep an eye on money in all my accounts, in one place. They track all account balances, credit card balances, loan balances, investment account balances, and even give me estimates on how much my home and vehicles are worth.
I also like that they both show me my net worth over time so I can see how I’m doing. Why net worth? I consider it the king metric of personal finance. Keep it moving up and you should be alright.
Back to the main topic
Increase passive income by changing banks. It’s not all that
difficult and if you don’t you could be missing out on years’ worth of
interest. So, it’s Sunday morning here and that’s how I’m spending it; moving
my assets to a better place and documenting the move for posterity (and hopefully
inspiring you to do the same).