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Switching to a savings account with an introductory cash bonus or interest rate can help you boost your savings, but you’ll need to check the terms and conditions — and remember to switch when the offer is up.
The main advantage of regularly switching savings accounts is simple: you can always make sure that your savings are earning interest at the highest rate. When a better rate than the one on your current account becomes available, you can close that account and open a new one to maximize your interest-earning power.
The other reason people switch accounts is to take advantage of introductory offers. For example, some bank will offer a cash bonus when you open a new account. Others will offer a higher interest rate for an introductory period.
There are several disadvantages to regularly switching accounts, including:
After seeing an ad for a money market account with an attractive introductory rate, Sam decides to see how much extra interest he could earn by switching accounts compared to simply leaving the funds in his current account.
So at the end of the 12 months of account hopping, Sam’s balance has grown to about $5,201. That’s an extra $100 over the course of a year.
While moving from bank to bank to maximize your savings does have its drawbacks, if you’re willing to spend a few hours reading the fine print it can help you build a bigger nest egg. Here are a few more tips to give your balance a boost:
Compare savings accounts with signup bonuses
Switching banks to take advantage of introductory offers can help you grow your savings, but it requires research and diligence. Compare savings accounts to find the best rates and account features for your nest egg.
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