Find higher interest with online banks

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Q. My mother has money in a savings account and I know she could do better if she would use an online bank, but she doesn’t like doing anything online. How can I show her what a difference the interest rate would make and how it could be worth it?
— Trying to help

A. The simplest way to show her would be to put the numbers in front of her.

Let the money talk.

Here’s an example from Alison Hall, a certified financial planner with Stonegate Wealth Management in Oakland.

Let’s assume there’s $10,000 in the savings account. “Regular Bank” has an interest rate of 0.5 percent and “Online Bank” has an interest rate of 1 percent.

At the end of 10 years, the account at “Regular Bank” would be worth $10,511.40, having earned total interest of $511.40. “Online Bank,” over the same time frame, would have a balance of $11,046.22, having earned $1,046.22 in interest.

“You can also do a comparison of fees and bring those to her attention,” Hall said. “Brick and mortar banks often have maintenance fees if certain features are not utilized — i.e.: direct deposit, bill pay, etc.”

Hall said online institutions typically have less overheard and therefore, lower costs and fees.

But you also have to consider how your mother uses the bank.

“If she is not comfortable online and prefers to go to a physical location to speak with a human being, the change may not be worth the extra interest,” Hall said.

Also note that online banks offer special rates to new customers but those rates often have expiration dates. Be sure you consider the offered interest rates for existing customers, Hall said.

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This post was first published in August 2017. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.