If you keep any significant amount of your savings in cash, you probably hate the paltry savings rates that are being paid right now. Even some of the so called "high yield" accounts have rates that most would say are far from "high yield".
I have kept the majority of my savings account in my ING Direct account for quite a few years. In fact, I have been a customer of ING Direct since 2002. I love ING for a number of reasons and I hate to move my money but I've decided to make some changes. I know I can easily find an account that will pay more than the 1.5% APY ING is currently paying on savings accounts or the .25% APY on the Electric Orange Account.
I've decided that I want to deal with one account for checking and savings so I will be opening a "high yield" checking account. I will still keep my ING account open with a small balance but the majority of my money will be kept in the high yield checking account.
While searching the Internet, I found the website, High Yield Checking Deals, which made my search much easier. It has a list of banks offering high yield checking deals separated by state. I found several accounts that would work for me and two accounts particularly caught my eye. Now, I need help deciding which one I should choose.
I'll call them Bank 1 and Bank 2.
- Bank 1
- 3.5% APY up to $25,000 and .50 APY for any amount over $25,000
- Across the street from my house with several locations in my area
- No fees and unlimited ATM refunds
- Has been in business since 1951
- Bank 2
- 4.5% APY up to $50,000, 1.0% APY for any amount of $50,000
- 2 Branch locations with the closest one 30 miles from my house
- No fees and up to $15 in ATM refunds
- Has been in business since 2007
If you aren't familiar with the high yield checking accounts, they are usually offered by smaller, regional banks and have a certain number of requirements to earn the high rate. They usually require you to have a direct deposit into the account, consent to receive electronic statements and use your checkcard 10-15 times in a month. If you don't meet the requirements one month, the accounts are usually still free but you will earn the standard interest rate for that month. The next month starts the process all over again.
Checkbook Image Courtesy of: helloturkeytoe
As long as you don't use the ATM too frequently, I would go for Bank 2. I guess I'm always the type that goes for the additional APY (while considering the cost/benefit). Also you can make the APY up to $50k compared to $25k on Bank 1. Good luck whichever you choose.
Bank 1
It would only take a couple trips at 30 miles to negate the extra 1% interest. And if you considered your driving time in the case you had to make a trip, it wouldn't be worth it.
Good luck, either way!
In that those rates are better than my savings I would likely go with bank 2, but keep my current checking account, and set up transfers between the two banks.
If such transfers weren't possible I would go with bank 1, because one unplanned trip to the bank negates the benefit.
-MBirchmeier
All of the above. Keep your money at Bank 2. Keep your account open at the nearby branch, for instances were you need to make a deposit or use the ATM.
I would probably go with bank 1 just because I like having a physical location near by if possible.
However - I probably would still want to keep my primary checking separate from my savings. Even if I live on a strict budget just knowing the money is there for impulses can be dangerous.
I would also consider service. I keep my money in a bank that has no local branches and not the best rates because they have the best service ever. The few times I had a problem they were so awesome and the hassle and stress I was saved was worth the lower interest rates.
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I have had an account at several different High Yield Checking providers for nearly 2 years now. They have always been out of state for me. The only inconvenience has been that I have to mail in my deposits, so it takes a bit for them to show up, but my regular deposits (payroll, etc) is done via direct deposit and thus is available immediately. Most will refund quite a few ATM fees for you - I have never gone over the limit. And the interest you make is well worth it if you have any kind of balance in your account to earn interest on. Bottom line, I'd choose the higher interest rate and go from there...