1. Wow, I already did this, I didn’t know there was a name for it! All Paypal runs through a designated account that has no money in it unless I am doing a transaction, then I transfer money into it online to cover it. One thing I made sure of, is that the acct. does not have overdraft tied to it. If someone tried to drain my acct. via Paypal, I didn’t want them draining the overdraft protection too!

    I put all my purchases onto a credit card. That way I have a nifty little spreadsheet at the end of the month that shows me where my money went. My card even breaks it out for me via category onlilne: food, clothing, electric bill, etc. That way I can track it, dispute it if needed, and I don’t have to mess with balancing an account all the time. I just make an online transfer to pay it off every month. AND I made sure I got a card with a high cash back option. Just got a check from them the other day. That was a nice perk.

  2. Thanks for such an informative post! I already do this with my business, but I love the idea of applying the concept to our family financial stuff too—I think I am going to set up the auto payment to one low interest CC, makes a lot of sense provided you are already budgeting for those bills and are paying them in full. I have a few more months to pay off my CC, so I think I am going to hold off til I do that first b/c its easier tracking for me at that point.

  3. Great concept, and thanks for the unofficial mention, but you forgot to link! 😉 just kidding, but my site is called Personal Finance Firewall.

  4. Great advice. However, I always have a problem with the great fear of buying online. Yet, everyone will gladly hand their credit card to a waiter/waitress who vanishes with it for several minutes and is doing who knows what with it. I have had fraudulant activity on my accounts twice in my life. Neither was traced to on-line purchases. And, yes, I know this because I do keep a card I only use for online that is not tied to my bank account. And now, I also use the same card for any purchases I decide to put on a credit card where the card vanishes from my sight and I don’t link credit cards to my bank account.

  5. @Jesse: Great site – thanks for mentioning it to us! Looks like you were far ahead of the curve on developing, and practicing, this concept. Lisa has been doing this for a while, too.

    @Michael: I used to work in fraud/investigations for a bank, and I saw first-hand the type of fraud you are referring to. When I go to restaurants I typically pay cash for this reason. Second choice is a credit card. I’d go far out of my way not to hand over a debit card tied to my personal checking account.

  6. I’d rather carry a debit card than a credit card to avoid the temptation to overbuy and in light of all the greedy, crooked things CCs are doing to customers nowadays. I’m still cautious of online banking because I know how many spams I get claiming my Bank of America account has been closed when I don’t even have one. I gave up PayPal for the same reason. Despite the possible convenience (and I’m not convinced there is that much), I’d rather keep a debit card from my hometown bank for online purchases and other needs. As for the “high” yields of online accounts, all savings account interest rates are so abysmal right now that I’m keeping my cash at home in a hidden fireproof box. Corny but convenient.

  7. I too like the simplicity of single card. In college I had three cards, never kept much of a balance usually, but still used a variety of cards. I stopped doing this after noticing an occasion where I’d been charged twice for something that I’d purchased. From that point on I decided to keep it simple because juggling too many account, credit cards, debit cards, only makes it harder to keep up with making sure all of your purchases are actually yours.

  8. Hi Frugal Dad,

    I do the same thing you do: one primary card. However, I do one thing differently. I set up the automatic payment for the minimum balance. That way, if there’s an emergency, the bill gets paid and I don’t get dinged with a late charge or a delinquency on my credit score.

    I then pay off manually in full every month. I’d recommend this route to ensure you will never get hit with a late charge.


  9. Jason i love the choice of the word “noise” to describe debt. A peaceful financial life is a supreme goal with me. Being a music gal, “noise” really resonates (pun intended!)

  10. Jason – Congrats on reducing the noise and freeing yourself!

    A single credit card hones all your energy into one money making transaction source. Nothing goes in or out without you know.


  11. Years ago I set my stuff up that way also.
    Paypal ties to a small free checking acct – balance under $200 – that is ONLY used for paypal.

    Online transactions on one credit card – small limit card.

    And my debit card – rarely used – tied to small checking acct that never has a balance over $500.
    Anything over that goes into my investment checking acct – which is not open to anything nor anyone except me. If the account shows odd checks, the investment co (Edward Jones) will call me and ask me if the check is valid before they will honor it 🙂 Nice service! When I was remodeling the house, that meant I left a list of contractors’ names with my broker that were ok to have checks written to – so he didn’t call me each time one of those names popped up.

    Some might see it as an invasion of privacy, but I see it as a valuable security measure.

    And as an added security measure, I refuse to do online banking – and while I can see my accounts, nothing can be moved around online – I have to do it in person – which suits me just fine. My banks are all with walking distance of me (small town!)

    I didn’t know there was a fancy term for this (firewall) …. I just thought it was common sense to limit one’s risk exposure 🙂 and that ‘everyone’ did it…. guess not!

  12. the firewall account concept is fine if, per the video, it is the paypal credentials that are compromised. if the ING credentials are compromised aren’t you SOL?

    anytime our symbolic credentials are used they are subject to discovery.

    so also distribute your funds and transactions among several depository institutions, at each of which you also employ a firewall account.

  13. Nice article! In answer to your hypothetical question about “shaving more off my cell bill,” I thought I’d add some admittedly unsolicited advice on the tangentially related topic of cell phone pricing structure, an area that periodically gives many of us pause and perhaps causes some reevaluate the necessity of the wireless plan altogether. Simply, if you’re paying a cell bill at all, you’re most-likely paying too much. We tend to think of wireless costs as fixed, but you can tinker with your plan to optimize your features to best suit your usage and often save significant cash in the process. I actually work in the consumer advocacy division of the Houston-based company Validas, where we electronically audit and subsequently reduce the average cell bill by 22 percent through our website, . Put simply, Validas guards against frivolous and unnecessary charges that inflate your cell bill more than it should be for your usage. You can find out for free if can modify your plan to better suit your needs by going to the website.

    For more info, check out Validas in the national news media, most recently on Fox News at .

    Good to everyone reading on making sense of and subsequently reducing your wireless costs, especially in light of this unforgiving economy.

    Consumer Advocacy,

  14. I love this idea – its a great concept but I still prefer to carry cash for my everyday things and a debit card or credit card for large purchases.

  15. nice concept. I agree with Erica – I like setting up the “pay minimum balance” option on my cc just in case life gets hectic and I forget…which unfortunately has happened.

  16. I love the concept. I happen to work online, and I do receive my payments from a variety of sources (Google, CJ, Linkshare, EPN, Paypal subscriptions). I do have a specific account I use for all online transactions, but I didn’t realize that it has overdraft protection. Time to correct that oversight.