What are the risks associated with opening a savings account with a variable rate of interest?
If interest rates fall, like they have done in the last couple of years, then your Rate of Return will drop. If that happens, and you are trying to live on a fixed income, then the return you get from the variable rate checking account may not even equal the current rate of inflation (which is exactly what has happened during this latest economic crisis.) On the other hand, there is very little risk of losing your initial deposit, unlike if you invested the same amount in the stock market. The only way you could lose your initial funds are if the bank goes under and you had more than the FDIC limit of $250,000 on deposit.
