The article concerns the question – Are all banks and their rates the same? Most people don’t really put a lot of thought into the bank they choose. They make the assumption that all banks are basically the same so there is no reason for them to shop around in order to get the best rate. Sadly this is not true; there is a difference from bank to bank in the rates that they offer. Part of the problem is that most people don’t realize how much small differences in interest rates really add up to.
Banks are by no means all the same when it comes to their rates. Although on most of the day to day accounts you will see little difference in terms of interest rates. On checking accounts the interest rates are all generally about the same. The reason for this is that these are the most common types of accounts so there is a great deal of competition to attract customers. The result is that the banks usually keep the interest rates about the same as their competitors.
Just because the interest rates are the same does not mean that the accounts are similar. More important than interest rates when you are choosing a checking account is the fees that are charged. Unfortunately these days almost all checking accounts come with fees and these can vary pretty dramatically. You are going to want to shop around in order to find the bank that offers the lowest fees. This can be a little bit tricky since you are rarely comparing apples to apples. Fees are going to be based on the way that you use your account so you are going to have to find the best fee structure for the way you do your banking.
Although the interest rates on checking accounts tend to be pretty similar this is not the case with other accounts. For things like savings accounts or CD’s the interest rates will vary much more dramatically. You are going to want to learn about money market rates that are being offered by your bank if you are looking for a place to invest your money. This is important because even small differences in the rate can really add up over time.
The reason that you really want to pay attention to the interest rates that are being offered on money market accounts is that most people underestimate how much that rate affects their savings. We are constantly being told about the miracle of compound interest but most people grossly underestimate the effect that it actually has.
This is a big part of the reason that so many people get into debt trouble, they fail to appreciate how much the interest is really costing them. A difference of one or two percentage points may not seem like a lot but over the course of a couple of decades of savings it really adds up.