"Teaser rates" can yield quick profits, just not as much as it seems

Submitted by a LOZO expert
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Introductory rates such as "Earn 3.00% for 3 months" can yield an initial bonus, just keep in mind what your rate will be after the trial period is over.

If you are willing to move your money around and are not worried about the impact to your credit report, you can try to take advantage of these teaser rates by moving your money from one bank to the next; just don't be surprised if it doesn't yield as much as you had hoped. Try this calculator  from My Money Blog to factor in the days of lost interest you might have while the banks move your money around.

If you want to find a teaser rate and stay there, pay attention to their regular rates, since that's what you will be earning for the rest of the time. As a rule of thumb, each extra 1% in the teaser rate for 3 months is worth 0.25% for the year. So a 2% 3-month teaser rate, which is 1% for the rest of the year, is like having 1.25% for the whole year. And every $1,000 invested into an account that pays 0.25% better than another account (say 1.50% vs. 1.25%) is worth an extra $2.50 for the entire year (before the taxes you will owe on that interest).

Be mindful of any fees or restrictions the new bank might put on your money, such as a minimum number of debit card purchases, which could outweigh any potential reward.

A LOZO expert posted this tip.


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