Thinking about moving your cash to a higher interest rate? Use this handy calculator to find out how much more money you’ll be looking at:
- This calculator is based on a rate-chasing breakeven time formula developed previously which takes into account the “days of lost interest”, or the time in between transfers where the money is not earning interest in either account.
- Although you will get a very similar answer either way, note that it asks for APR, not APY. I also made a APY to APR calculator if you only have APY and want to be exact.
- Usually, there can be between 0-3 days of lost interest when going from one bank to another. This depends on the policies of either bank and also which bank initiates the transfer. This value greatly affects the break-even time. I did an experiment that lists some example times.
- The 6-month value (182 days) isn’t simply 6 times the 1-month value (30 days), as the calculator takes into account the time needed first to “break-even”.
Examples and Discussion
Moving $2,000 from Bank A @ 5.0% APR to Bank B @ 5.5% APR. If there is 1 day of lost interest, even the difference of 0.50% APR only results in a projected gain of less than $5 ($4.68) after six months.
Moving $50,000 instead from Bank A @ 5.0% to Bank B @ 5.5%. If there is no lost interest, the projected 6-month gain is about $125. If there is 3 entire days of lost interest, the gain is still $102.
To some people, either scenario might not be worth the effort. To others, transfers don’t take long to set up and extra money is extra money. The purpose of this calculator is to present the facts and let the user decide for themselves. Comments like “rate-chasing is stupid” are not productive.
Another factor to consider is how likely the current rate difference will persist.
Feedback is welcome.