Comments

  1. The trouble with 1-2% is that the dollar is losing 8-10%. If you don’t want to lose value in your hard earned money, you need to get out of dollars.

    Open an online trading account and put your money is GLD. It’s still liquid because you can sell at any time, but at least your money will not be going to mud.

  2. I don’t understand why so many media and online articles mention these low interest rate accounts when you could get around 5.00% through high interest yielding checking accounts. (the only catch usually is that you have to have at least one direct deposit or bill pay and 12 credit/debit transactions per month.

    To find you nearest bank see link below. (distance isn’t an issue for me as i do everything via online or mail)

    https://www.checkingfinder.com/

    • That is so true! I found my local bank through this website and they are offering 4.01% annual which is way better than the measley less than 1% (.2% to be exact) that I was getting from my savings account.

  3. I am not familiar with Ally Bank, and am a bit uneasy with putting my money in a bank I’ve never heard of anywhere but here. Where have they been all this time? Any further info? There’s nothing on their website.

  4. @Lisa: They are relatively new in name and mission, but were previously known as “GMAC Bank.” GMAC Bank has been around a while. The savings product is FDIC insured up to $250k as are most deposit accounts now (it’s still important to confirm this).

  5. I use e-trade, keeping my money in their max rate savings lowers my trades to $9.99. I can also instantly transfer cash from my emegency fund into my stock account which I can access via checks and a debit cards. I wish they had sub accounts like ING, I don’t think anyone else does that yet.

    E-trade is only paying .8% it seems like it was over 5% just awhile ago. I’ve been considering moving 1/2 my emergency fund into a AAA Bond fund or something pretty safe but paying something.

  6. FYI, Citibank has a 5-yr CD promotion at 3.75%. It WAS 4% last month. May be worth dumping some of your unneeded money there.

    Every year you put your money in a 1.5% savings account, and you don’t use it, is 2.25% in lost money earned to put it differently.

  7. I’m with Jason – I use HSBC too. I use them because the rate is higher than ING, and they have a local branch. I still use ING for smaller savings accounts, like tax bills and such where the interest difference doesn’t amount to as much. I think ING is far superior in their ease of use and features though..

  8. I used to use ING, then switched to Emigrant Direct, then to HSBC direct, but I’ve since switched again…

    I don’t understand why so many media and online articles mention these low interest rate accounts when you could get around 5.00% through high interest yielding checking accounts. (the only catch usually is that you have to have at least one direct deposit or bill pay and 12 credit/debit transactions per month.

    To find you nearest bank see link below. (distance isn’t an issue for me as i do everything via online or mail)

    https://www.checkingfinder.com/

  9. I like your idea of keeping $1000.00 in emergency cash close at hand. For several years, I’ve carried that amount in a locked tool box in the trunk of my car, so that it is readily available when I’m away from home. I’ve only had to use it a couple of times, but both incidents were real emergencies far from home.

  10. I have heard a lot of great things about ING but with those rates they are the same as my money market account at my bank. Can’t switch right now, vacation/emergency fund is staying put for now.

  11. Well done FrugalDad. I subscribe to your philosphy whole-heartedly, and that’s why I write about having 3 seperate banks in “Going Broke To Win BIG.”

    Protecting yourself from yourself is exactly how I treat my finances. I don’t have an online bank though, which may be smart of me to pitch for referral income. I just have 3 banks I can go in and speak to someone about my money.

    My savings bank yields 4.2%/yr compared to just 2.5%% for my “Go Broke Bank” based on 5-YR CD rates.

  12. I really don’t get why people would put money at 1.75% interest rate?

    Emergency fund? if you don’t have any debts, it could be a good idea. But if you have any kind of debts, why would you invest your money at 1.75% when you probably pay over 8% on your other debts?

    Your best investment right now is to pay down your debts. Investing $1,000 for a year in a saving account will make you earn a big $17.50. If you take the same $1,000 and you pay down your 12% credit card, you will save (read earn) $120. That is almost 7 times your savings account return.

    So here is my suggestion:
    - open a line of credit account with no banking card access and rip off the checks (you won’t be able to use it unless you have an emergency). This is your emergency funds.

    - take the money you would be saving for an emergency fund and put it against your debts (mortgage, credit card, personal loan, etc.).

    You will save a lot more money in interest and you will still have an emergency fund available in case of big trouble.

    Thoughts?

    • I agree with paying off credit cards at 15% before keeping a lot of money in a savings account earning you 1.75%. But the first step should be saving $1000 and keeping it in a savings account. The reason behind this is not to get rich. However it is to build a “safety net” to catch those small rainy day events (new tires, repair an appliance) that will happen in your debt free journey. The $1000 is a safety net against using a credit card to cover these small expenses that will happen.

  13. I totally agree with you Mike. That is why earlier this year after the bottom dropped out of interest rates I took about half my savings to pay off my house. I think it was a great decision because rates have only continued to drop since then, and I no longer have a mortgage so I have been able to save faster since then.

  14. What advise can any of you give for someone just starting out? I have student loans, mortgage payment, married and 1 child… I am very interested in saving but I want to know what is my best option..?

  15. “Emergency fund? if you don’t have any debts, it could be a good idea. But if you have any kind of debts, why would you invest your money at 1.75% when you probably pay over 8% on your other debts?”

    If you don’t have some kind of emergency fund, what will you do when you have an emergency? Probably go farther into debt! Just my opinion, but if we had debts we’d like a little cushion while paying them off. Heck, even Dave Ramsey, the king of pay-your-debts-off-now, suggests having a baby emergency fund of 1,000 dollars before paying off debts.

  16. Following Albert’s link above, I find this no-fee checking account with (currently) a 4% rate.

    http://www.checkingfinder.com/details/jeffdavisbank/kasasa-cash

    The qualifications are a little weird — 10 debit card purchases per month, log into your account online at least once a month, etc. — but it looks attractive to me.

    Being a financial novice, I’m almost sure I’m missing something. What does anybody else think about a deal like this?

    • I’m with Dave, wondering if anyone has used these high interest checking accounts. Never heard of these before. Seems like they could be legit as they are making the fees off of the debit card transactions. Reminds me of the PerkStreet.com debit card. Only there you receive cash back based on how much you spend. Any one other than Albert have any experience with any of these accounts?

      • There isn’t much of a catch other than most banks limit paying you the high interest rate on balances up to 25,000. They do that because they’re probably losing money just trying to get more business and keep more customers. Mosts of these are regional banks trying to grow.

  17. Everbank is a solid online bank, and those world currency CDs are as good as investing in US denominated banks.

    This is what is really important to know: Higher interests means higher risk. Banks that offer those high interests, e.g. Citibank, HSBC etc. need your cash for their reserve requirements. Even though they may be TBTF for now, the lone depositor can fail. Even if it is FIDC insured, do you really want to wait for the your money tied up until the FDIC pays you, or roll your account over to a new bank? Emergency money that is not liquid is not emergency money.

  18. Hello there! This article could not be written much better!

    Looking at this article reminds me of my previous roommate!
    He always kept talking about this. I will send this post to
    him. Pretty sure he will have a very good read. Thanks for sharing!

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