Where should people search for high-paying savings accounts?

As of March 8, nationally available savings accounts were offering yields of just 0.23 percent, according to Bankrate. But many online banks outdo the national average. “The banks already paying better yields are much more likely to remain competitive by increasing those payouts further as interest rates rise,” McBride said. Additionally, Bankrate points out that linking accounts such as savings or checking accounts can help boost your rate at some institutions. “Sometimes called relationship rates, it’s more common for brick-and-mortar banks to offer them,” according to Bankrate.

Can people trust putting their money in an online bank?

Technology has long transformed traditional banking. I do most of my banking on my mobile device. I pay bills, transfer funds and even deposit checks using my iPhone. I only need to visit an ATM about once a month for the few times I need cash. If you’re going to use an online-only bank, just make sure the banking entity is insured by the Federal Deposit Insurance Corp . (FDIC). If you’re comfortable with digital banking and looking to maximize what you earn on the money, consider an online bank.

Is it really worth the effort to switch banks?

If you saved the suggested three to six months’ worth of living expenses as an emergency fund, keeping all that money in a low-interest-bearing account can be frustrating. But you could spend a lot of time chasing relatively low rates. A difference of a few dollars may not be worth the effort. “You could be driving yourself crazy, leapfrogging back and forth,” McBride said. However, if your bank is paying next to nothing, it could be worth breaking up if you switch to a financial institution that is going to pay a much better yield and remain competitive as rates rise.

Is it too soon to switch banks?

The Fed is expected to continue raising rates this year. Even so, it’s going to take a lot of rate hikes to get savings account yields up to significant levels, McBride said. Changing your banking relationship is easier than it used to be, but it’s not without some coordination. If you have set up automatic bill paying, for example, you’ll have to make sure to time a move just right to ensure everything is set up for the withdrawals. You could also open an account to hold your rainy-day money while keeping open the account where you conduct your monthly household business.

Why shouldn’t people just invest their emergency funds?

When it comes to having a savings account for an emergency, it’s all about reducing risk. Your rainy-day fund’s No. 1 job is to be there when you need it, and that means being liquid and easily accessible. “You have to prioritize safety and access to the money,” McBride said. “Yes, you want to get the best yield you can get, but only without taking risks. Because when you need that money, the car breaks down or the water heater goes, not having access to cash often means paying a very high price.”

Personal Finance

Here’s why it may be time to break up with your bank

With interest rates rising, it could be time to leave your bank for another financial institution paying more on deposit accounts

By Michelle Singletary

Updated March 22, 2023 at 12:34 p.m. EDT|Published June 1, 2022 at 7:00 a.m. EDT

This column originally ran June 1, 2022, and has been updated.

The Federal Reserve has signaled that more interest rate hikes are coming. That’s worrisome if you’re borrowing money. But if you’re a saver, it’s welcome news, because it means earning more on the money you have parked at a bank.

If you have a personal finance question for Washington Post columnist Michelle Singletary, please call 1-855-ASK-POST (1-855-275-7678)

Since the Great Recession, stockpiling money at a bank or credit union has almost felt like depositing your money in your mattress, given the minuscule interest rates financial institutions pay on checking and savings accounts.

Then high inflation hit. This led the Fed to increase interest rates in an effort to dampen consumer demand and decrease inflation.

Weighing bank distress and inflation, Fed faces next rate hike

“Now, at least things are moving in the right direction,” said Greg McBride, chief financial analyst at Bankrate.com. “Interest rates are going up and the goal is to bring inflation down.”

If you’re following the advice to keep a healthy emergency fund, you might wonder whether you should break up with your bank for a higher rate on your savings or checking account. I asked McBride about the questions savers should consider if they are planning to move their money.