- Eric Rosenberg looks for three things in a savings account: low fees, high interest rates, and a trustworthy bank.
- He’s found that high-yield savings accounts from Charles Schwab, Ally, and Capital One fit the bill perfectly.
- He spreads out his savings among the banks to maximize his earnings and separate different types of savings.
As you progress through your financial journey and focus less on budgeting and more on saving, you should see your savings-account balance slowly rise. After reaching your emergency-fund goal, you shouldn’t just stop saving. But as your savings grow, you might find yourself growing out of your current bank or savings account.
I used to keep all my savings at one bank, but these days I have them split up at three. Here’s a look at the three savings accounts I use, why I use them, and what you should look at most carefully when choosing a bank account for your cash savings.
What to look for in a savings account
When picking a savings account, I look for three main features: fees, rates, and the ease of working with the underlying financial institution — whether it’s a traditional brick-and-mortar bank, an online-only bank, or a credit union.
For fees, I want to see none for regular activity. No minimum monthly balance, no monthly recurring fee, no annual fee, and no debit-card fee. When I give a bank my money in a savings account, I know it’s lending it out for mortgages, credit cards, and other loans that earn it a big profit. I’m not going to pay fees for the privilege.
For interest rates, higher is better. I like accounts that offer rates well above what you’d get from most traditional banks. At the biggest banks in the US with branches dotted around the country, you’ll usually find an interest rate below 0.05%.
Some savings accounts pay a paltry 0.01%. You can’t get any lower without adding a digit — after the decimal! Many banks, however, pay well over 2% today. I know I’d rather get 200 times as much. I wouldn’t settle for less.
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Finally, is it a bank or credit union I can trust? There are big banks out there with penalties from the government for engaging in unsavory activities. I want a bank that cares about its customers, keeps my money and information safe, and makes online banking easy.
Adding up those features leads me to a few top choices in the modern banking industry.
The 3 accounts I use for my money
There are a few reasons I use three accounts for my savings, but for me it came down to chasing the best interest rates while keeping my money at banks I like that make online banking and transfers very fast and easy.
1. Charles Schwab Bank
I use Schwab as my primary bank. My Schwab checking account is the nerve center where all my income goes in and all my bills and expenses go out. I keep my basic emergency fund there because I can transfer to my checking instantly during business hours.
The savings account pays about five times the national annual-percentage-yield average of 0.09%. If it paid more, I would probably keep all my emergency savings there. But it doesn’t, so on to …
2. Ally Bank
The rest of my emergency fund lives at Ally Bank, which pays more than 20 times the national average interest rate. As a self-employed worker, I like to keep at least six to 12 months’ worth of expenses available in the reserves just in case. Ally meets all my above criteria and is one of my favorite online banks.
3. Capital One Bank
I’ve had an on-again, off-again relationship with this bank for more than a decade. Way back before it was purchased by Capital One, I opened the old Orange Checking and Orange Savings accounts at ING Direct, which ultimately became Capital One Bank.
My wife and I are saving to buy an investment property, and this is where we’re keeping the down payment. It pays over 20 times the national average interest rate and is another of my very favorite online banks.
Make things easy, but not too easy
Outside of my quickly accessible emergency savings at Schwab, I don’t want my savings to be too closely mingled with my checking and regular-living funds. Though I stick with a general spending plan each month, I wouldn’t want to tempt myself too much to overspend. Even us money experts get tempted once in a while!
With the right savings strategy, you will make the most of your money while avoiding losing any of it to fees. If you can do those things and are happy with the service you get from your bank or credit union, you’re doing things right.
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