Author Topic: Online Savings Accounts- Yay or Nay?  (Read 3952 times)

deltabelle

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Online Savings Accounts- Yay or Nay?
« on: December 30, 2014, 11:17:17 AM »
I am setting up a budget and some goals through Mint and I do not currently have a savings account.  I would like to open a couple for separate reasons.  Mint is suggesting opening one online through Capital One or FNBO Direct.  I could just as easily set up some at my own bank.  These would be for short-term goals, so I'm not looking to make any money by letting it sit there and collect interest for a long time.

Should I deal with my own bank?  Choose one of these offered through Mint, or are there better options out there?

SmallCheese

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Re: Online Savings Accounts- Yay or Nay?
« Reply #1 on: December 30, 2014, 11:22:50 AM »
I have been using DiscoverBank for several years. Their service is easy to use and the customer service is great. An additional bonus is they offer a comparatively very high interest rate; I think it's .85% right now. This account is where I direct deposit my paychecks until I buy investments.

BarkyardBQ

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Re: Online Savings Accounts- Yay or Nay?
« Reply #2 on: December 30, 2014, 11:40:05 AM »
Barclay's Online Savings account currently at 1% is good. We use the Dream Account @ 1.05% to hold a small emergency fund. https://www.banking.barclaysus.com/online-savings.html

Spondulix

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Re: Online Savings Accounts- Yay or Nay?
« Reply #3 on: December 30, 2014, 11:42:16 AM »
I used to use American Express personal savings. The interest rate was higher than other savings accounts, but they required another account (checking or savings) to pull from!

Is the idea so you have money somewhere you don't have easy access to?

SantaFeSteve

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Re: Online Savings Accounts- Yay or Nay?
« Reply #4 on: December 30, 2014, 11:56:32 AM »
Yay!

I have had an online account for almost 12 years.  Started with ING and now Capital One. 
The customer service has been better than my brick and mortar bank most of the time, competitive interest rates. 

BMEPhDinCO

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Re: Online Savings Accounts- Yay or Nay?
« Reply #5 on: December 30, 2014, 12:09:48 PM »
I use Ally bank - almost always the top 3 rates and easy to deal with.  I have like 13 accounts with them and use it as a way to "bucket" my "upcoming" expenses (ie, it's savings, but only until I need it for auto/health/pet/...).  I find it a great way to not think too much on it since it's not in checking and I don't see it much, but it is there and relatively easy to get should an emergency arise.

GizmoTX

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Re: Online Savings Accounts- Yay or Nay?
« Reply #6 on: December 30, 2014, 12:16:07 PM »
DS has a Synchrony account that pays about 1% APR. Online savings banks pay much more than major storefront banks. Choose one that has easy free transfers to/from your checking account, low/no minimum, & FDIC. You will be limited to about 4 transactions a month but it's a savings account.

MDM

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deltabelle

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Re: Online Savings Accounts- Yay or Nay?
« Reply #8 on: December 30, 2014, 01:14:15 PM »
Is the idea so you have money somewhere you don't have easy access to?

Yes!  Indeed it is.  If it's in our checking, it will be spent. 

Thank you all for these wonderful suggestions.  I have a ton of reading up to do!

Spondulix

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Re: Online Savings Accounts- Yay or Nay?
« Reply #9 on: December 30, 2014, 01:58:46 PM »
I was asking because I setup my online savings for the same reason, and had it that way for a few years. In retrospect, it was actually far more complicated than just making a savings account with my existing bank and forcing myself to have the self-control to not touch it/spend it. It's purely psychological to have it online (meaning inaccessible), and overly complicated if you do need to pull from it (in case of emergency, which I needed to do, and it took a day or two for the transfers to go through.

catccc

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Re: Online Savings Accounts- Yay or Nay?
« Reply #10 on: December 30, 2014, 03:09:01 PM »
I use smartypig.com thru BBVA.  Rate is 1%.  The best part about it is that you can have buckets within the account, and have specific amounts moved into each bucket automatically from an outside account.  So I have categories that include:
-Annual Savings: my cash savings goals for the year, I end up with about 14-18K at the end of the year, and when 1/1 rolls around, I use this cash to fund my and DH's Roths to the max at the start of the year.  It's safe to assume that our earned income will exceed the max, and I like to get it done and out of the way ASAP.  And feel special for maxing out so early in the year.  Any remainder gets rolled into the "house fund"
-House Fund: cash I've set aside for a down payment on a house.  I used to keep, like $120K in here, but in 2014 I got real and figured that most of that money should be doing better than 1%.  So it's only 40K now.
Then I have a series of "sinking funds."  Savings for a specific purpose (vacation), or a known upcoming bill.  "Predictable Rainy Days," if you are a YNAB user, so I automatically transfer certain amounts to the following accounts monthly.  The exception is vacation, I am a bit more haphazard about saving for that.  But anyway, the predictable rainy days include:
-Tuition (paid 2x/yr for our 2 kids)
-Insurance (one bucket for the following, life insurance paid in Feb (me) and April (DH), car insurance paid 2x/yr, renters insurance paid annually, and motorcycle insurance paid annually.)

But... the account is designed for you to save, not spend.  So there are a few things you need to do to access funds (get them from the smarty pig account to my checking account)but it's not difficult.  The process is like this- Set up new bucket, transfer funds you want to keep saved to new bucket and close out remainder of old bucket to checking account.  A bit of forethought required, but it's a system that happens to work for me.