Online Account

[Cajaya]

I remember reading through one post that mentioned a good website to open an account, such as a savings account.

 

I have the option of opening another account at my current credit union but the problem with that, I can transfer or take out as easily as I want. I was wondering if any of you have any good recemendations for websites where I can securely have a savings account, that might take some extra steps to get the money out, such as doesnt give me an ATM card, etc.

 

This seems like the only way Im going to be able to start saving!

 

Thanks!

[VibrantEcho]

There are two - the more well known one is ING (www.ingdirect.com) - they offer a 2.6% interest rate, and the only way to get your money out is to transfer it to a linked checking account at your regular bank/CU - takes about two days, so you can get at your $$$ when you NEED it but not easily enough for all those impulse withdrawals.

 

The other one is Emigrant(?) - not sure what the website is. I think it's pretty much the same as ING except that their interest rate on savings is 3.0%.

 

Hope that helps!

 

Fiona

[Quit Screwing Me]

I give Emigrant 3 BOO's. I tried them. Their service was horrible, for me anyway. Ended up closing the account about a month after opening it and put the $ in my existing ING account.

[Ahutchga1972]

I have a savings acct. at the same bank where DH and I have our checking acct. I can transfer $$ back and forth, but I very RARELY do it, since the acct. is set up for our child's private school tuition. The thought of my child not having books/uniforms/school fees definitely keeps me from transfering friviously!

[Cajaya]

Thanks!

 

I just opened one at ing. Thats exactly what I was looking for

[madflower]

Actually e-trade, ameritrade, etc all leave your money in a money market account if you don't invest in stocks. I don't know exactly the rate they pay off the top of my head but you can get immediate withdrawal from e-trade out of their atms, or do same day electronic transfers. Provided you have the cash in your account and you aren't waiting for the trade confirmations IE final confirmation/accounting which is done at the end of trading each day. It gives you much more lucrative investments opportunities then the piddly 3% you get from ING or other savings accounts.

[madflower]

Worth mentioning because 90% of americans fall into this catagory.

 

If you have ANY outstanding debts, car, credit card, home equity, etc. etc

and you pay more then 3% * ( 1- (tax bracket)) for interest (you have to pay income tax on your interest.). You are better off, paying off the loan then actually having a savings account. Why pay more for money, then you will make on it?

 

The easiest places to do this are revolving credit accounts because you can quickly get your money back out. I personally use my HELOC (home equity line of credit), but you can use credit cards, or other things as well even early car payments or mortgage, etc. The basic principal is you just pay off the extra money, then when you "dip into your savings" you just re-add it to your credit balance. You really aren't out anything. You saved most likely 5-25% in interest for a couple of months on the money.

 

You can use a credit card, like you can pay off your mortgage for a moth or two ahead, and just skip the payment to pay off your credit card in full.

 

It really does two things. It prevents you from paying interest on the borrowed money, AND it makes you think twice about respending it. =)

 

Savings accounts, aren't really good for much except for their psychological benefits. You can usually find better ways to utilize that money.

[fadlan12]

But what about staff loans? I pay like 6% but I also get write off taxes, so it makes up for the interest rate.

[Quit Screwing Me]

Madflower, this is true, however, everyone should still have some sort of savings built up. Emergencies can happen at any time, people can lose their jobs for months at a time, etc...... Just because you've paid down your loans, etc, early in the past, won't give you the CASH, NOW, to eat. I don't have much saved, but it's slow and steady. I pre-pay my mortgage by $150 each month though.

[madflower]

but what about staff loans? I pay like 6% but I also get write off taxes, so it makes up for the interest rate.

 

 

If you are in the 33% tax bracket, you are still paying ~4% for the money after taxes. And your 3% interest account is making you ~2% after taxes.

 

 

Madflower, this is true, however, everyone should still have some sort of savings built up. Emergencies can happen at any time, people can lose their jobs for months at a time, etc...... Just because you've paid down your loans, etc, early in the past, won't give you the CASH, NOW, to eat. I don't have much saved, but it's slow and steady. I pre-pay my mortgage by $150 each month though.

 

I wholeheartedly agree you should have a "rainy day fund" with 6 months expenses in it. Just like all the financial guidelines say but 90% of americans don't really have that.

 

If you need money now. Put it on a credit card. Keep one credit card with a 0 balance, and this buys you enough time to get the money to pay it off in full so it doesnt cost you anything.

 

There is no rule as where this money comes from. You could borrow against your house which you have prepaid in the form of a HELOC. I mean it isn't totally unreasonable. You do have a high cost of access to that money. probably 600 bucks in loan fees, plus around 600/yr for the interest. If you need it in one year for a year. You are pretty much breakeven with 3% savings account.

 

Personally... I think the cup is half full, and my "rainy day fund" is really my "sunshiny day fund"

I expect to make as much off that money as my retirement accounts do. Several financial planners told me a double every 7 years is what should be expected which is roughly 10-12%/yr. And even if i got the numbers screwed up and it should double every 12 years at 7%. I would still be pissed with a 3% return. Availability is within a couple of days from an investment account far less then the credit card grace period so even racking up the credit card which will be paid off at the end of the month is okay.

 

Also since the cost of access to your money in you pre-paid in your mortgage, is pretty high. It doesn't make sense to pay that off early either versus establishing an investment account. It does however make more sense then 3% savings account if that is REALLY rainy day fund money, because theoretically, you shouldnt touch that so in 5 years you have paid off your principal by ~5500 dollars and if you have to reborrow it then the 1000 in fees to access for a year it aren't really all that bad considering you are still ~3500 hundred dollars ahead on your mortgage then if you would have put it in a 3% savings account.

 

Also, I have a tendency to forgot I do keep around 300-500 bucks extra in my checking account to cover a monthly budget overage which may be your savings account money. If it gets too drastic, I can cut back some of my payments the next month to compensate. IE if the mortgage is paid for 6 months in advance. I can skip a mortgage payment. In my case it is my HELOC, but the jist of it is the same.

I also put almost everything on a credit card so the feds can track me (and get my reward points) but more importantly I can take money out of the next paycheck to pay it and skimp that month or just not pay as much towards something a bit if it is close.