Personal Finance Advice

Far too often consumers are so concerned with what their interest rates are that they never take a step back and look at the bigger picture.  While low interest rates for debt are great and high interest rates for savings are fantastic, the interest rate should not become the be-all, end-all reason driving people to put their money in certain places. 
 

The interest rate you earn on an interest-bearing account should not be the only reason your money is parked there.  In other words, look beyond the interest rate.
 

What about fees? It doesn’t matter if your credit card has a 0% APR if you are paying a fee every month just for the privilege of carrying the card around in your wallet.  Your mortgage loan’s interest rate might be lower than everyone else on your block, but your neighbors may not have a costly prepayment penalty or Private Mortgage Insurance with every payment.  Some fees are inevitable when dealing with debt, but some lenders will offer low interest rates to get your attention and then hit you with a barrage of fees.
 

Fees apply to savings too.  Why in the world should you pay a fee every statement cycle for your savings account? Your money should be earning interest without having the balance slowly whittled away by fees.  There are simply too many financial institutions offering feeless interest-bearing accounts with impressive interest rates for you to keep your money in an account that is getting constantly bombarded by fees, regardless of the interest rate they give you.
 

What about your needs? You might have a credit card with a low interest rate, but would you be better served by a rewards card with a slightly higher interest rate that allows you to accumulate cash, travel benefits, or more? If you are the type of person who regularly utilizes a credit card, yet always pays the balance off each month, then a rewards card can result in some really attractive bonuses.  You can apply this same logic to an equity loan.  Yes, you will probably pay a higher interest rate for a fixed equity loan, but isn’t that better than having an initially lower adjustable interest rate that has the potential to shoot sky-high when interest rates rise?
 

Savings accounts should be about more than interest rates.  Examine the reason why your money is in savings.  For example, if you’re building up an emergency fund you won’t want this money to sit in an account with a high interest rate which also happens to be quite risky.  Losing your entire emergency fund due to a downward swing of the market is bad news.   
 

A low interest rate for credit and a high interest rate for savings can be a great starting point to grab your attention, but a savvy consumer will know that there are other aspects to take into consideration.