When Rate Chasing Backfires

Rate chasers move money to whichever bank pays the most.  Those banks tend to be new banks, online banks, or banks looking to add take on deposits.

Do you come out ahead by chasing rates?  If you have a ton of money, it may be worth moving for a slightly higher interest rate.  Most people don't have enough in savings accounts to make a switch worthwhile (if rates are the only reason for switching).  In addition, your money may not earn interest while it moves from bank to bank, so your earnings are eroded.

Consumerism Commentary looked back at a few of the highest paying banks in recent years, and how things unfolded.  In some cases, the highest rates are short-lived, and they may even be a red flag.

Further reading:

• You Know You're a Rate Chaser When...