Banking Mistakes to Avoid as Interest Rates Rise

woman withdrawing money from ATM
Be smart about banking. |

The following is a guest post by Ken Tumin, founder and editor of

As interest rates rise, it’s common for banks to raise loan rates much faster than deposit rates. That was especially the case early in this rising interest rate environment. Deposit rates only inched upward even after the first couple of Federal Reserve rate hikes. However, banks could only hold out for so long. Deposit rates eventually moved higher in 2018 as the Federal Reserve continued to raise rates, but if you haven’t been diligent, you could be seeing little evidence of higher rates on your deposit accounts. To benefit from rising interest rates, avoid these banking mistakes.

Not shopping around

Business woman writing on a computer in the office
Shop around for the best deal. | Rostislav_Sedlacek/iStock/Getty Images

It’s very likely your bank’s deposit rates are not keeping up with rising interest rates. If you’re using the same bank for your savings that you’ve always used, they’re probably in no rush to raise your savings account rates. The average savings account rate is still relatively low, and that is due the slowness of many banks in raising their savings account rates.

In general, banks haven’t felt pressure to raise rates since their customers have been content on keeping their savings at the same account they’ve used for years. During the depths of the zero interest rate environment, you couldn’t really fault consumers for not shopping around. Interest rates at even the top savings accounts offered little benefit unless you had considerable savings. That has changed. Interest rates are now much higher, and it’s now worth moving your money even if you only have a moderate amount of savings.

The first step in moving your money is shopping around for higher rates. There are several options for your money that include local banks and credit unions.

Not asking your bank to match rates

Woman taking notes while talking on mobile phone
It never hurts to ask. | jacoblund/iStock/Getty Images

Once you find higher rates on accounts at other banks and credit unions, it’s worthwhile to see if your current bank is willing to match that rate. It doesn’t hurt to ask, and that’s the easiest way to quickly benefit from higher rates.

It’s not always possible to receive a rate match from your bank. To increase your odds, look for accounts at other institutions that are similar to your current institution. A local bank will be more inclined to match an offer from another local bank rather than from a credit union or an out-of-state bank. Once you find a higher rate at a similar institution, bring evidence of that when you ask for the rate match. Also, ask the branch manager, who may be the only one to have the authority to rate match.

Not moving your money for higher rates

Man in suit with falling money
Move your money for higher rates. | Dean Drobot/Getty Images

If your bank won’t match a rate, you need to make the effort to move your money. Finding a higher rate is only helpful if you open the new higher-rate account and move your money into the account.

Fortunately, moving your money has become easier thanks to the internet. Countless banks and credit unions now offer online banking that allow customers to open accounts online without physically visiting a branch. Also, many online banking platforms allow customers to electronically transfer money to accounts at other banks. If the bank offering a higher rate is on the other side of your city, you may not have to make the long drive to open an account.

Stay tuned for part two of this series.

Ken Tumin is founder and editor of, which has been tracking and rating the savings, CD and checking account offerings of banks and credit unions for more than a decade.

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