Online Savings Accounts

[10can]

While looking to start an online savings account you see a lot of promotions and rate wars out there.

Is it a good thing to jump from bank to bank to get the best deals?

Will this hurt your credit rating at all?

Is having several savings accounts open a good thing?

For Example:

Let's say I open an ING Orange Savings account to get the free $25.00 then a few months later I jump to let's say HSBC to get a 6% APY offer. After the 6% goes down I jump to let's say iGObanking to get 5.30%.

Is all this jumping good? Should you close each account when you jump or keep them all open with a small amount of money in them in case you want to jump back to them in the future?

I know there has to be those that have tried jumping from bank to bank and those that have just opened one account like the ING Orange Savings and have never left them.

Just wanting to get some feed back on both perspectives.

Thanks

[Ima saver]

I am probably not a good one to answer, but all I have is and ING online account. I can get better rates at my local banks. However, if I was doing this, I would leave a small amount in each account, so I could jump back in if the rates go back up.

[Newbie]

Unless you have very large amounts of cash, I don't see the sense in jumping for a rate that's .5% or so higher

I'm new to OSAs but I chose ING because they seem to have the best website and they've been around for a while. It also beats the 0.40% at my bank and the 3.2% at my credit union so I'm satisfied

Having several bank accounts shouldn't affect your credit unless they do an inquiry on you (I don't think banks do that)

[sweeps]

One problem with jumping around a lot is you may not earn as much interest as you would as if you stayed pat. For example, let's say Bank A offers 5% and Bank B offers 5.5%.

The interest on a $10,000 balance at Bank A is $1.39/day. At Bank B it's $1.53/day. While your money is in transit from A to B, you earn nothing. So, if the transfer takes 5 days, you've missed out on 5 * $1.39 = $6.95 in interest. It will take you 50 days (6.95 / ($1.53 - $1.39)) to break even with where you would've been with Bank A.

And keep in mind when opening a new account, it can be a lot more than 5 days your money is in limbo.

[kv968]

Having several bank accounts shouldn't affect your credit unless they do an inquiry on you (I don't think banks do that)

Online banks will do a "credit check" when you open an account with them. It's usually a "soft pull" which won't affect your credit. Some however will do a "hard pull" which, on your credit report, will look as if you inquired about credit. This may affect your score if you do it too much or have other recent, genuine credit checks (ie. cc, loans, etc...) on there. Best thing to do is call the bank and ask before you apply.

And IMO, you'd be better off finding a good online bank you like that pays a decent and consistant rate and just stick with them.

[sweeps]

One other comment here... the more accounts you open at various banks, the more exposed you are to fraud and identity theft. Every bank you have (or had) an account at is holding lots of personal information about you -- information that would be very useful to thieves.

This applies to all banks, not just the "online" ones.

[cptacek]

Thanks, Sweeps, for the math angle. That is good for everyone to remember. But, you can open the new account, move a bit over to get the wheels a-turning, and then when the account is fully open and functioning, then move the rest, it should take less time (maybe 3 days instead of 5 days).

I would keep the accounts open, just because if you leave a dollar or two in there (if they have no minimum), you can transfer money back to them without going through the hassle of opening an account if their interest rates become competitive again.

[fake_usa]

But, you can open the new account, move a bit over to get the wheels a-turning, and then when the account is fully open and functioning, then move the rest, it should take less time (maybe 3 days instead of 5 days).

Smart move!!