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The Message Hidden in 12 Cents

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A young man emptying out a piggy bank.

There really is no excuse.

I worked on my family taxes this weekend. I gathered all the documents, including forms received for interest payments on bank accounts.

We have several accounts at Virginia Credit Union. My family also has deposit accounts at a large bank that we opened years ago. Though we have moved more and more of our activity to the credit union, we continued to keep those older accounts, partly because we never got around to closing them.

I’m going to get around to it now. And I’ll tell you why.

I looked at the annual statement of interest I received from Virginia Credit Union, and was pleased that we had earned a couple hundred dollars in interest in 2017.

Next, I looked for a similar form from the other institution. We never got one. Why? The IRS requires banks to send customers a 1099-INT if the interest received is more than $10 a year. I never received the form because my earnings did not meet that paltry standard.

Curious, I looked at the printed statement I got from the bank in December, the end of the calendar year. There it was: On page 2 of the statement, on a little line showing “Interest Year to Date.” I ran my finger from left to right across the tiny type.

Care to guess how much it was? It came to a grand total of 12 cents. Yes, 12 cents for keeping my funds on deposit at a giant bank. A measly penny for every month of the year.

That’s the reason I’m going to switch my accounts.

I will grant that the rates that all financial institutions pay on checking and savings accounts have been unusually low for the last 10 years. The period of low interest rates dates back at least to the financial crisis of 2008.

Knowing this, some people think there really is no reason to bother leaving their bank for a better deal. They think it will be a lot of work. They worry that an automatic bill payment will get lost in the shuffle. They don’t think the benefits are worth the hassle. They don’t think it makes a difference.

But there is a difference, and in my own experience with the tax information, the difference was substantial.

Of course, before you switch, you should do a comparison based on your own circumstances. The rates Virginia Credit Union pays on checking, savings, money market and saving certificate accounts are published here.

I’ll be making the switch this week. There really is no excuse to put it off any longer. It’s as plain as the difference between $200 and 12 cents.