If you have ever heard me speak or teach about saving money, then you have undoubtedly been introduced to on-line banks. I’m not talking about banks that have websites but about banks that have little to zero physical “bricks & mortar” locations.
Here’s why I use on-line banks (over a local bank) for my savings accounts:
- Better interest rate On-line banks pay interest that is generally 5 to 8 times more than a local bank savings account (somewhere near that of a 2 to 3 year CD) – but it doesn’t affect the liquidity of my money
- Sub-Accounts If you have a regular savings account, all you can see is a total amount of the money the account currently contains. With on-line banks, you can create something called “buckets” or “sub-accounts” to give every dollar a designated name! This means you can create sub-accounts like “Christmas”, “Emergency Savings”, “Vacation”, “Life Insurance”, etc. See the example screen shot below from my Capital One 360 account. You can click the image to see a larger version. This makes it so much better!
- Automatic SavingsYou can establish automatic transfers from another existing bank account. In the example I show below, I have set up automatic transfers for my emergency fund, YMCA annual membership, House taxes and insurance, Christmas, and life insurance premiums. It is a “set it and forget it” approach to savings that is awesome!
- Customer Service Because these banks only have an on-line presence, they have to be INCREDIBLE at customer service, or people would not even know about them. Every interaction I have had with my on-line banks has been an incredibly positive experience.
- FDIC-insured These banks are insured by the FDIC – just like any other bank. That means your deposits are protected. I like that!
- No fees There are no fees unless you exceed the monthly allowable transactions (or something extraordinary like that)
- No MINIMUM balance This makes it perfect for any and every saver.
Set a savings goal. Then establish an automatic savings plan to help you accomplish it!
Do you use any of these banks? What do you like about them most?