Though I have multiple online savings accounts and often move money around to get the best deal, I don’t consider myself a real rate chaser. Rate chasers, according to the definition in a NY Times article, are savers
who hunt for the best interest rates at banks and credit unions and quickly move their cash from one account to another.
I want to get the most out of my money, but I didn’t go after each and every bank that pays the highest rate. I only open an account when the promotion rate is significantly higher and the promotion period is meaningfully long. In addition, in order to make a profit, I will need a substantial amount of money at hand to play the game. These are the reasons I opened an account at FNBO Direct early this year when they offered a 6.00% APY promotional rate for six months. With nearly $100,000 deposit, all borrowed from credit cards with 0% APR offers, I was able to collect about $500 a month in interests. At the end of September when the promotion ended, I have earned more than $1,600 from FNBO alone. What could be better than making money from money borrowed for free? Right now, I have my money at IGoBanking which pays 5.17% APY (check out the complete list of online bank offers). Though there are CDs out there with higher rates, I like the flexibility of an online savings account.
The reason for rate chasing is of course for preserving and growing the money. While in the long term the stock market is the place to be, a high-yield savings account is a sure way to grow your hard earned money in the short term, whether it’s for a house downpayment, purchasing a new car, or a vacation. And it turns out that rate chasers’ return isn’t bad at all compared to the total return of the stock market measured by the S&P 500 index.
The NYT article, Rate Chasers Are Online and Moving Cash Quickly, has this part as a rate chaser’s logic for chasing the rates:
“The millionaires have stocks and bonds, and they’re chasing with their safety money,”? said Nick Ferris, a 24-year-old software engineer from Rockville, Md., who readily acknowledges that he is one of the more aggressive rate chasers, having borrowed money at 0 percent introductory rates from six credit cards. “We poorer people who don’t want to go bankrupt if the stock market crashes are more inclined to go rate chasing with all of our money because all of it is our safety money.”?
Are you a rate chaser?
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EverBank Money Market Account 1.25%: Open an EverBank Money Market Account with a minimum balance of $1,500 and earn 1.25% bonus rate for the first six months. The first year APY is 1.01% for account balance up to $50,000. Find out more about this offer.