Saturday, November 20, 2010

Separate Accounts

I love my bank. That may sound as strange as saying I love going to the dentist (which I used to also), but it's actually true. What made me love my bank even more was moving and opening a new checking account at a local bank, and then realizing what jerks that local bank are (I have since closed my account). So technically, my bricks and mortar bank is 1,300 miles away from me, but with direct deposit and online banking, it rarely makes a difference.

One thing that was handy about having two separate banks was that I had my designated travel fund in my least-used bank, which made it easier to slot away funds and not be tempted to spend them--out if sight, out of mind, and moving money between the two banks involved writing and mailing a check, which I could easily talk myself out of. Then I got a notice that my local bank is instituting a $5 monthly surcharge on checking accounts unless you maintain a balance of something like $2500. I don't remember the exact amount, but it was high enough that I would never keep that kind of money in an account that earns .000000004% interest. So I started shopping for a new bank.

I could have just kept all my money in my beloved bank, but I really like having a separate hidden account, plus, as great as my bank is, my money market savings interest rate has dive-bombed in recent years meaning I might do better shopping around a little bit.

This is almost spooky, but the same week that I got that letter about the $5 surcharge and was inwardly grumbling about finding a new bank, Frugal Girl linked back to a post of hers from a while ago talking about her multiple online accounts with ING. I have never met Frugal Girl, but I trust her, and she's never steered me wrong before. Plus, I've had many friends who have used ING, the city I used to work for used ING for retirement accounts--in short, it's a name I know and have heard good things about.

They have free, high(er) interest rate savings accounts, and they allow you to have more than one. It's tied to your regular bank account, so can move money between the two easily, and the interest rate is about double what my MMA is yielding right now. Huzzah!

The point of all this rambling is that having a separate account, for anything (doesn't have to be travel), is really the handiest, easiest way to accrue money. If you're someone who buys a lot of Christmas gifts, set up a free, interest-earning savings account and sock away a little bit all year long. Then when it comes time to buy things, you don't have to freak out wondering where the money is. People love to invoke the notion that if you just skip your weekly coffee, you'll save something like $300/year. How about you just stick a painless $10-$20 a week into your secret savings account. It adds up. Whenever I start shopping for a vacation, I know that a jarring as it is to charge a $300 plane ticket, I just have to move that money from my travel fund and send it off to Amex.

You can keep accounts anywhere, doesn't have to be ING, but I've found in my sleuthing, that online banks like ING have better rates for savings accounts. If the notion of online banking seems scary (and I understand why it would), shop around for a bricks and mortar bank that doesn't hose you with fees. One thing that I liked about my local bank was that there was always a branch in the grocery store I frequent, and my savings account was tied in with my store savings card meaning I got a tiny percentage back on my purchases (gas and groceries). That amount was not going to total the $5 a month they want to charge in fees, however, so that's why I've jettisoned them (jerks).

It's the banking equivalent of hiding cash in your sock drawer.

*Plus, if you open an account and let me refer you, you get $25 and I get $10. If you want in, email me at


  1. I also use ING. I have two accounts there in addition to my regular checking account and my savings account. I am using one ING account to put money away for my down payment and the other to build up my 6-month emergency fund. I could have chosen to keep my emergency fund with my regular savings, but I really like how much interest I'm earning from ING.

    Don't forget to refer someone so you'll get a kickback!