Update: I made a new and improved version of this calculator.
Using the rate-chasing breakeven time formula posted previously, here is the easy-to-use JavaScript Calculator version to help you decide whether you should move your money and chase the higher rate.
Note that it uses APR. Only know APY? Then please see my APY to APR calculator first. If that’s too much trouble, note that if you use APYs for both rates your final answer will be very close anyways.
Calculator:
For example, if you were moving from a bank paying 4.00% APR interest and going to a bank paying 4.50% APR, but would lose 2 days of interest in the transfer, according to the calculator it would take 16 days just to break-even. After that, you will be ahead in interest, all other things being equal.
I may add a feature later showing how much more money you’d make after X number of days, but for me, the transfers take 1 minute to schedule online, so the main thing that matters is that I make money!
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Neat calculator…good work!
Well when you enter your info you might want to consider adding a “transfer in loss of interest days” and “transfer out loss of interest days” as we know for example HSBC you loose 2 days each way. Other places like Fidelity and Etrade credit the funds same day on ACH in bound but debit funds 1 day prior on out bound.
Places like Citibank and Bank of America debit and credit ACH transfer both ways same day so there is no lost interest. And finally places like Ing for example when I pull from my checking account at Citibank money is credited to ING before it debited from Citibank but when I push funds to Citibank it debited 1 day before from ING before it credited to Citibank so net loss of interest is 0.
Yes, this calculator requires the user to figure out how many days of interest are lost for their specific bank scenario. It is only for moving money into one direction – towards the higher interest rate. If you are doing more complex stuff like routing money through a third-party then you would have to add up the days lost.
Perfect.
Very handy – thanks for doing both the legwork and the programming.
You’re like a one-man Bankrate!
I transfered money out from ING on the 19th to my external account and till today (24th), i dont see the money. Is there anything i need to be concerned about? or is this the norm?
I plugged in my numbers (old rate=4.25%, new rate=4.75%, days of lost interest=2) and the result is 17 days to break even which is way off the target. If I transfer $10000, I will be losing only $2.33 in interest for the 2 days of transfer ($10000x.0425/365*2). And that loss will be recovered only after 2 days at the new rate. Am I missing something? or is it the calculator?
I think you are missing something. The *additional* interest earned by moving your money is only 0.5%, or 13.69 cents a day. Divide your $2.33 by .1369 and you get 17 days. You would have gotten the 4.25% anyways if you did absolutely nothing. 🙂
never mind….. i figured it out after re-reading the post. the goal is to see after how many days one will break even. doh!
Jonathan – could you possibly put a link on your main page to this calculator? I think it’s quite useful and a good place for it would be right under the “Online Savings Accounts Comparison” link. Thx!
I never tried this. But one way to not loose interest I am thinking is to move money from your checking, saving account to Treasure direct and then deposit it back to whichever bank you want. Even HSBC has no holding period with Tbill deposits. You still earn interests for 4 weeks.
I just found this calculator via another blog. I have to give you props on this one! Very well done!