It looks like my money market account’s interest is finally stabilizating at 4.50%, which is .4% lower than the last time I had mentioned my money market account which is over at gmacbank. Which is okay with me, not like I’m happy that it went down but the amount of money in my account right now doesn’t make any significance difference losing that .4%. Losing the interest rates is all handy and dandy but today I encounter something that was more of a worry than just losing some interest rates.

For the most part, I try to stay away from checking my investment accounts as much as possible because then I would not be inclined to touch or do anything with the account but yesterday I checked my account and I’m glad that I did. As I was going over my account summary, I realized that there has not been to much activity going on in the account. Thats mainly because I haven’t been putting any thing into my account, so the only thing in my statement was my interest rates that were credit into my account for the past 4 months. While looking over the statement, it made me realize that I was actually making some decent money and I thought to myself, “wow, I’m glad that I had started this account a while back. Look at all this interest it’s making and how much I would have been missing out on”. But thats when I realized and said, “wait a minute, these numbers don’t seem to be adding up right”. Then after careful review of the account summary, I was right, they weren’t adding up right. Each month was credited some money from the interest rate but was not the full amount that month had earned.

Now what I am to think. There has got to be an explanation right? I mean, gmac bank is a pretty big online banking firm and I doubt that they’re trying to cheat me out of my money so I decided to give them a friendly call to see what the problem was. Maybe it was some kind of a monthly fee I didn’t know about?

So I called them up and this woman answers. The conversation was pretty quick, after giving her all my account info and my security questions, the conversation went something like this:

Me:” So I was looking over my account summary for my money market account and noticed that my interest rates weren’t adding up, whats the issue here”?

Gmac representative: “Okay, let me take a look at it.”

(Silence and some keyboard tapping noises…)

Gmac representative:”Hmmm…this is pretty interesting. I’m not exactly sure what’s going on here. Let me take out a calculator to verify that they’re not adding up.”

now I’m thinking…wow. Its an obvious miscalculation, I mean you can look at the credited number and see that it doesn’t add up ( kinda like you know 1+1 is not going to be a two digit number)

me:” …ok”.

(more silence and some calculator tapping noises…)

Gmac representative:”wow, you’re right. It doesn’t add up. I’m really not sure what’s going on here.”

Me:”So it’s not any kind of fees that maybe you’re deducting each month?”

Gmac representative:”No, when we deduct fees, we list them as such. What we’ll have to do is put in an investigation ticket in and someone from the department will contact you within 2-3 business days”.

Me:”…oh…ok”.

Gmac representative:” Is there anything else I can help you with”?

Me:” No”

…

So that was pretty surprising. I mean, even if the interest rates don’t add up to that much, its the trust thats the issue here. Whether it’s two dollars or two hundred dollars, money is money. I’m not sure what would have happened if I didn’t call them about this issue. How long would it have taken until it was fixed or would it ever have gotten fixed? I’m not so sure.

I’m curious, has anyone else experience anything like this before? Maybe you might want to check your investment accounts and see if your interests are adding up.

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So today I decided to take a look at my Money Market account, which I usually try to check only once a month, and saw that the interest rate went from 5.30% to 4.90%. I was surprised that my initial reaction wasn’t disappointment but rather quite passive. There was a point in time where I used to think that every one hundredth of a percent counted and mattered and that I would find the best money market account accordingly. But the truth is, unless you have a nice amount of money, say a million dollars, it really doesn’t matter too much.

I think people who are new to finance and just started saving have this same problem just as I did. People are always looking to get the highest percentage rate on their interest, but the thing is, the percentage rate really doesn’t matter unless you’re dealing with substantial amount of money. Instead of concentrating on trying to find an account that offers a percent higher than the current one you’re considering, you should put that energy into concentrating on how to stay saving for more than 3 months. Most Americans fall short on their savings goals, I don’t have a percentage rate to offer you but I’m sure its quite high. The personal savings rate in the United States is a negative number, but majority of Americans think of themselves as people who “always look for ways to save money“.

So back to the money market account, lets do a quick example to demonstrate what I’m talking about.

For the sake of my story, lets use my interest rate(in case you were wondering, my account is with Gmacbank) at 4.90%, which used to be at 5.30%. We’ll say account 1 has $5,000 and account 2 has $500,000. Lets crunch some numbers.

Account 1($5,000):
In one year, at 4.90%, this would make $245/year ($20.42/month).
Now at 5.30%, we get $265/year ($22.08/month).
So not a huge difference eh? Just 20 more bucks a year or $1.66 a month. I somehow doubt I’ll even notice this small difference. Now account 2 on the other hand…

Account 2($500,000):
In one year with 4.90%, this account would make $24,500/year ($2,041.66/month).
At 5.30%, this account would be $26,500/year ($2,208.33/month).
Now in this case, the difference is quite notable. This account dropping by as little as .4% makes a difference of $2,000/year and $166.67. If I was in this case, my reaction most probably would have been quite different than that of today.

The point I’m trying to make is don’t worry about the percentages now and focus more on getting our accounts to $500,000. Lets continue saving and worry about the minor details later. Chances are, you don’t have $500,000 so percentage rate is not going to help you become rich, well at least not now. The idea of saving on the other hand is a complete different story.

Quick note: If you are looking for a place to put your money into for savings and also concerned with not having to worry about commitment, then you should really consider looking into getting a money market account. I strongly suggest going with Gmacbank. I’m not saying this because they’re paying me or anything like that but just from my personal experience, they really have it well together. They are really helpful each time I call and all my calls end with the feeling of satisfaction. For more information, you can go here.

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