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Is ‘rate chasing’ worth it? How to decide if you should switch banks.

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1 year ago

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Is ‘rate chasing’ worth it? How to decide if you should switch banks.

After years of raising interest rates to combat high inflation, the Federal Reserve recently began lowering the federal funds rate.

While this is good news for borrowers, eager savers may not be as appreciative. With savings account interest rates falling in response to a lower federal funds rate, those who’ve been enjoying high returns on their savings may be tempted to switch banks to secure the best rates they can find.

While “rate chasing” may seem like a good strategy to get the most bang for your buck, it has some disadvantages you should be aware of. Read more to find out when it’s worth switching banks.

Read more: Federal funds rate: What it is and how it affects you

Savings interest rates vary by bank and can change at any time, often in response to the federal funds rate. Rate chasing involves constantly searching for the best savings account rates, opening a new account when you find a better rate, and transferring your savings to your new account.

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Often, this pattern of opening and closing bank accounts to eke out a few more basis points isn’t worth it. While there’s a chance it’ll help you earn a few extra bucks, it takes a lot of time and effort that may be better spent elsewhere. However, there are certain situations where switching banks to chase a higher rate may be worth it.

Switching banks to earn a much higher interest rate — for example, switching from a large brick-and-mortar bank to an online bank offering a high-yield savings account — is often worth the effort.

Some major banks — like Chase, for example — tend to offer rock-bottom savings account interest rates, often around 0.01% APY. Meanwhile, it’s possible to find high-yield savings accounts offering rates of at least 4.00% APY.

If you aren’t currently using a high-yield bank account, making the switch from a national bank to a financial institution with more competitive rates can make a major difference in terms of your interest earnings.

The following table illustrates how much interest you’d earn with a $10,000 balance in a savings account earning 0.01% APY, 4.00% APY, and 4.20% APY (with interest compounding daily).

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In this case, switching banks to earn 4.00% APY would amount to a difference of more than $400 over the course of a year. But as you can see, jumping from a rate of 4.00% APY to 4.20% APY would only result in an extra $20.

In other words, if you’re already using a high-yield savings account that generally offers a competitive rate, it’s likely not worth switching banks to find a marginally better interest rate.

Plus, savings account interest rates change all the time. A bank that has historically offered a competitive rate will likely continue to do so in the future, even if it doesn’t currently offer the best rate on the market.

Finally, the administrative hassle of moving your money from bank to bank may have financial costs too. Some banks charge account closure fees of up to $50 for closing a bank account within a certain period of time, such as three or six months of account opening. Such a fee could easily eat up any gains in interest earnings.

Read more: Does closing a bank account hurt your credit score?

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Ultimately, it’s up to you to decide whether or not it’s worth switching bank accounts, but the following tips can help.

  • Do the math: Calculate how much money you’d earn with a new account compared to your current account. If it’s a minor difference, you may decide the administrative effort isn’t worth it.

  • Consider any sign-up bonuses: Sometimes, banks offer cash sign-up bonuses when you open a new account. While not necessarily a reason to open a new account, a sign-up bonus can sweeten the deal if you decide to switch for other reasons. (See a list of the best new bank account sign-up bonuses here.)

  • Consider fees: Some savings accounts have monthly maintenance fees and some charge early account closure fees. Consider whether an account switch would mean paying these fees, and if so, calculate how much they’d take away from earned interest. On the other hand, switching from an account with a monthly fee to a fee-free account can further boost your earnings.

  • Weigh account features: Sometimes, it’s worth switching accounts to get the benefits you want and need. For example, if the ability to split up savings between multiple goals is important to you, switching to an account with this perk may be worth it, even if the difference in interest rate is negligible.

Read more: How to switch banks: An easy step-by-step guide

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Finance

Tesla Puts Its Money Where Its Mouth Is in the Biggest Way Possible | The Motley Fool

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9 hours ago

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February 7, 2026

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Tesla Puts Its Money Where Its Mouth Is in the Biggest Way Possible | The Motley Fool

Go big or go home has always been Tesla’s style, but this time it comes at a cost of saying goodbye to two instrumental models.

Investors will never be able to claim that Tesla (TSLA +3.50%) doesn’t shoot for the stars or go all in on its ambitions and vision. Even from its humble beginnings with only the Roadster for sale, plotting to one day reenergize an all-but-dead global electric vehicle industry, it aimed big. Now Tesla is doing it again, except this time its long-term sights are set outside of the automotive industry, and that comes with a cost.

Goodbyes are difficult

For investors who have been part of Tesla’s dramatic rise, it’s a bittersweet moment to say goodbye to vehicles that were instrumental in turning Tesla into the business it is today, while grappling with a future of humanoid robots, driverless vehicles, and artificial intelligence (AI).

Tesla announced it will end production of its high-end Model S sedan and Model X crossover in the second quarter and transform that California-based factory space into an assembly line for the Optimus robot, according to Tesla CEO Elon Musk. “It’s time to bring the Model S and X programs to an end with an honorable discharge. We are really moving into a future that is based on autonomy,” Musk said during the company’s earnings call in January.

Image source: Tesla.

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Perceptive investors likely saw this move coming. After all, Tesla stopped accepting new orders for the Model S and X in China last April due to escalating tariffs — remember Tesla imports those two models into China, making them very expensive compared to the locally produced Model 3 and Y. As of late 2025, Tesla effectively discontinued taking new orders for the Model S and X in Europe due to low demand.

Take a step back

Before investors panic and have knee-jerk reactions such as saying Tesla is no longer an automaker, or being overly concerned it’s discontinuing a big chunk of its product list, it would be wise to take a quick glance at recent sales.

While Tesla doesn’t break out its Model S and X sales individually, it gives us plenty of insight through sales of its “other models,” which are combined results from the Model S, Model X, and Cybertruck. In 2025, deliveries of those models totaled 50,850 units, or just over 3% of Tesla’s total 1.6 million deliveries.

Tesla Stock Quote

Today’s Change

(3.50%) $13.90

Current Price

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$411.11

What it all means

For investors, this officially should mark the fork in the road. It’s absolutely time to take a look at when and why you started your Tesla position, and whether it’s still the company or has become the company you first aligned with. Tesla is aiming to be far more than an electric vehicle maker, and by the end of this year, the company could be producing Optimus robots with a long-term goal of making a million units annually.

Uncertainty is risk, and Tesla’s future and business is arguably more uncertain in this moment than it has ever been, or at least since its early beginnings. There’s nothing wrong with that, and the upside is sky-high, but it’s also not an investment for everyone. It’s critical that investors understand this because Tesla is again shooting for the stars and putting its money where its mouth is. Now it’s for you to decide if this is a ride you want to take.

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Finance

Rogers Sugar AGM: Shareholders Approve Directors, KPMG Auditor and “Say on Pay” Resolution

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21 hours ago

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February 7, 2026

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Rogers Sugar AGM: Shareholders Approve Directors, KPMG Auditor and “Say on Pay” Resolution
Rogers Sugar (TSE:RSI) shareholders approved all resolutions brought forward at the company’s annual meeting, including director elections, the appointment of auditors, and a non-binding advisory “say on pay” vote, according to preliminary results reported by the meeting’s scrutineer. The meeting w
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Finance

Block vs. PayPal: Which Fintech Stock Is Better Positioned for 2026? | The Motley Fool

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1 day ago

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February 6, 2026

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Block vs. PayPal: Which Fintech Stock Is Better Positioned for 2026? | The Motley Fool

Two companies battling to win the global payments market.

Great businesses win by solving problems, and the $2.5 trillion global payments market is a goldmine for companies that can make money move effortlessly.

Two of the firms competing in that space are Block Inc. (XYZ +4.85%) and PayPal Holdings Inc. (PYPL +1.30%).

Image source: Getty Images.

As each pushes into new technologies and revenue streams, the next year could define their long-term trajectories.

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With this potential turning point, I’ll examine which fintech stock may fit best in your portfolio.

PayPal’s moves into AI, global payments, and stablecoins

PayPal shares have dipped 37.28% over the last year, but the company has three initiatives that could help reverse that trend: PayPal World, artificial intelligence (AI) agents, and cryptocurrencies and stablecoins. PayPal World and AI agents enhance the current services, while crypto and stablecoins open up entirely new financial terrain for PayPal.

PayPal Stock Quote

Today’s Change

(1.30%) $0.52

Current Price

$40.42

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Announced in June 2025, PayPal World will allow customers to pay global merchants using their payment system, or wallet of choice, in their local currency. In essence, you’ll start seeing PayPal integrate seamlessly with other payment services.

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For AI shopping, PayPal says a customer can tell an AI agent they need a ride to the airport at 4:50 a.m. The agent can both book that appointment and pay for it.

Finally, that brings us to cryptocurrencies and stablecoins. The company enables the buying, selling, and sending of crypto within its wallets. PayPal also offers its own stablecoin pegged to the U.S. dollar called PayPal USD (PYUSD) for fast, global payments. As of this writing, holding PYUSD offers a 4% annual yield.

Its peer-to-peer payment service, Venmo, can also boost revenue over time. As a reference point, in 2021, PayPal said it generated roughly $900 million from Venmo. PayPal expects it to generate $2 billion in revenue by 2027.

Block’s next growth chapter

Similar to PayPal, Block shares have stumbled over the last year, dipping 22.48%.

Block Stock Quote

Today’s Change

(4.85%) $2.59

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Current Price

$55.97

Once again, the key is looking at what lies ahead.

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Its flagship Cash App service still has the reputation of friends just sending each other money, but Block is focused on turning it into a complete financial platform. Through banking, savings, direct deposit, bill paying, an AI-powered money assistant, and more, users are gaining fuller control of their financial lives through just one app. In Q3 2025, Block reported $1.62 billion in gross profit from Cash App, a 24% year-over-year increase.

Its global lending products have now surpassed $200 billion in provided credit. Defaults remain low, with 96% of buy now, pay later installments paid on time and 98% of purchases incurring no late fees.

Outside of its consumer products, Block is building out a robust suite of merchant tools to provide businesses with everything they may need, including credit card terminals, payroll services, and loyalty program marketing campaigns. Business owners can also build websites through Block, which could lead sellers to adopt more of its tools over time.

Block has also leaned deeper into cryptocurrencies. In October 2025, it launched Square Bitcoin, which will automatically convert credit card sales into Bitcoin. Block also holds roughly 8,800 BTC, worth nearly $770 million.

The PayPal vs. Block winner

PayPal and Block are both stocks that could rebound in 2026 if their initiatives gain traction.

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Block has high-growth segments in cryptocurrencies and lending, and its expanding suite of services and tools for businesses can help it generate more revenue from its current customer base. That high upside potential also comes with a high beta of 2.66, meaning it is more than two and a half times more volatile than the general stock market. Despite those issues, the balance sheet is strong, with $8.7 billion in cash compared to $8.1 billion of debt.

PayPal has steady, transaction-based fees from its global payments platforms and even pays out a dividend of $0.56 per share. Its beta of 1.43 also means it’s less volatile than XYZ. This may appeal more to risk-averse investors. The key here will be if PayPal’s recent moves can take it beyond being just a steady and mature business. With $12.17 billion in debt and $10.76 billion in cash, PayPal operates with a slight net debt that’s reasonable considering its consistent earnings.

Ultimately, the choice comes down to whether you prefer owning PayPal as a dependable revenue machine that could grow meaningfully as it enhances its services and features, or Block’s higher-risk path that could deliver outsized returns if its bets pay off.

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