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- Capital One is asking for dismissal of a lawsuit brought by customers over interest paid on savings accounts.
- Sometimes banks begin offering a new account with a higher rate, but existing customers aren't grandfathered in.
- Check your bank statement to find out if you have the latest savings account and are earning the best rate.
Capital One is asking for dismissal of a lawsuit filed by customers over high-yield savings account rates.
Here's what happened: Capital One used to have an account called 360 Savings. In 2019, Capital One launched the new 360 Performance Savings Account.
Some customers thought their 360 Savings account was simply changing its name to 360 Performance Savings. But nope — this was a new account with a different name and higher interest rate. If you wanted to earn the better rate, you had to actively open the new account.
So some people have unknowingly had 360 Savings for years, earning significantly lower interest rates.
In the lawsuit, the plaintiffs' lawyers allege that Capital One didn't inform 360 Savings customers that these were two distinct accounts, or that 360 Performance Savings paid a higher rate. However, as American Banker reports, Capital One now wants this case dismissed because it claims people had every opportunity to learn these facts on their own.
Here's the thing: Capital One isn't the only bank that creates new accounts when it offers higher rates. This may have happened with your institution, too.
Capital One isn't the only bank paying lower rates on old accounts
Capital One 360 Performance Savings pays 4.30% APY, making it one of the best high-yield savings accounts out there right now.
However, Capital One savings rates for the 360 Savings Account are just 0.30% APY as of last month. If you have $10,000 in a savings account, this would mean the difference between earning $439 versus $30 in interest over one year.
You might be thinking how upset you'd be if you found out you'd been earning so much less in your savings account. But it's possible this scenario has happened to you, too. Capital One isn't the only bank that creates new accounts when it wants to offer better rates.
Several institutions create a new savings account with a different name, then pay a higher rate on that account. Meanwhile, customers with the old account continue to earn the previous rate.
Like many Capital One customers, you might assume that your savings account just has a new name and you're earning the rate advertised on the bank's website. But that might not be the case. You could be earning a lower rate than other customers.
How to know if you're earning the best interest rate with your bank
So how do you figure out if you're earning the best rate with your institution?
First, visit your bank's website and find the current savings interest rate displayed online. Then pull up your bank statement. If you have multiple accounts with a bank, all of the accounts' transactions usually appear in the same bank statement. Be sure to look at the section for your savings account and not, say, your checking account.
The exact layout of your bank statement may look different depending on your institution. But you can probably see the Annual Percentage Yield (APY) listed under your account number and account opening date. It should be in the same area as the statement period's beginning balance and amount in withdrawals and deposits. Along with the APY, the statement should include how much interest you've earned in this statement period and in the calendar year.
If the APY is the same as the one listed on the website, you're good to go. If not, the bank has either made a mistake — or you don't have the savings account you think you do.
What should you do if you're not earning the highest rate?
Let's say you find out you have an old savings account and aren't earning the best rate with your bank. What should your next steps be? You have a couple of options.
Find out if you can open the new savings account
Contact your bank and ask whether you can open the new savings account with the better interest rate. If the answer is yes, you can open the account, move over your savings, and close the old account.
Shop around for a new high-yield savings account
Maybe your bank won't let you open the new account as an existing customer, or maybe you don't want the hassle of regularly checking whether you have the most up-to-date account. Or you might be thinking that if you're going to open a new savings account anyway, you might as well shop around first.
Look for a savings account that not only pays a great rate, but also meets your other needs. If you want to bank digitally, check out the best online banks. Or you might prefer a savings account with a low minimum deposit, an ATM card to easily access your savings, or no balance requirements for earning the top APY.
You may decide to just open the latest account with your existing bank, and that's OK. But you might find that there's a better fit somewhere else.