In a perfect word, I wouldn’t spread my money among more than one or two savings accounts. There is value in simplifying personal finances and I try to take that approach where possible. Forces are working against me, however, keeping my finances more complicated than they would be otherwise.
Occasionally I review and evaluate banking products for the benefit of Consumerism Commentary readers. For some examples, see my reviews of the Ally Bank Savings Account, FNBO Direct Savings Account, and EverBank Money Market Account. In order to evaluate these products I use my own money to open new accounts. This has left me with a long list of banks where I keep not much more than the minimum allowed balance.
Without Consumerism Commentary, I expect I’d leave most of my cash in a savings account that offers consistently high interest (not teaser rates) and exceptional customer service. Yesterday, a visitor asked me to explain where my cash is held, so I put together this chart, based on my account balances at the end of January 2010, not including money market funds within investment accounts.
The visitor also asked why I keep so much in savings accounts when the money could be earning more in the stock market. Besides the risk, I expect I’ll need most of this cash within the next year or two for buying a house.
The chart below, designed with Microsoft Excel 2010 Beta with data from Quicken Home & Business, further breaks down my cash by identifying savings accounts and checking accounts at the above banks.
| Bank | Amount | Int Rate as of Feb. 8, 2010 |
|---|---|---|
| ING Direct Business Savings | 43.52% | 1.05% APY |
| ING Direct Orange Savings | 28.93% | 1.20% APY |
| EverBank High Yield Money Market | 6.66% | 1.51% APY |
| ING Direct Electric Orange | 4.40% | 0.25% APY |
| Wachovia Business Money Market | 4.40% | 0.05% APY |
| FNBO Direct Online Savings | 3.15% | 1.40% APY |
| TD Bank Checking Account | 2.48% | 0.00% APY |
| Wachovia Business Checking | 1.74% | 0.05% APY |
| E*TRADE Bank Complete Savings | 1.55% | 0.50% APY |
| Wachovia Crown Banking Checking | 1.28% | 0.05% APY |
| HSBC Advance Online Savings | 1.00% | 1.35% APY |
| Ally Bank Online Savings | 0.53% | 1.49% APY |
| Wachovia Personal Savings | 0.36% | 0.05% APY |
This table shows that there is a lot of room for optimization. I could move money around to take better advantage of the highest of low interest rates. According to a quick calculation, moving all of my money at ING Direct to Ally Bank would only provide an additional $40 per year, at most in interest. That’s hardly a financial incentive at this point, so the only incentive to consolidate accounts would be for simplicity.
Where do you keep your cash? Do you prefer simplification or diversification for your savings?
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{ 13 comments… read them below or add one }
Simplification for sure. If fact, A as a retiree I have to include the cash component of my investment accounts to even have a chart. ;-)
Local Credit Union 62% of Cash 095% APY
Investment Accounts 38% of Cash, .05% APY
Mine cash is getting about as spread out as yours at this point my cash is spread out amongst 8 different accounts at 6 different institutions. I could definitely optimize but once you get used to doing things a certain way it is hard to change.
One thing I didn’t mention in the article was my use of “sub-accounts.” I split my deposits at Ally Bank between two separate accounts to try their multi-account feature, and I have about ten different accounts within my ING Direct savings account, and most of them are titled based on a savings category like vacations or emergencies.
I too have several accts but have condensed it. ING for discretionary fund, Ally for efund and HSBC for our joint/house fund. Do have Etrade and Emigrant accts but they have small amount in each. Used them when rate was good but not anymore and transferred $ to ones listed above.
My wife and I each have a ING account.
Right now, since we’ve bought a new home a few months ago, we prefer our cash to be easily accessible. Therefore, we only have one checking and one savings account at a local brick-and-mortar institution (community bank, not one of those mega-banks). Once we get our tax refund, I plan to open an online account (savings or CD) with ING or Ally to get a bit more interest.
I used to be a rate chaser and would move my money around to different banks to get the best rates. I’m now all about keeping it simple and have the majority of my money (90%) in my local credit union. I also keep a little bit of money in a Schwab checking account (10%) too.
Like Rainy Day Saver said above, I prefer to keep my money easily accessible.
I’ll take simplicity over diversification. I almost opened an Ally account, but they wanted me to physically sign a form and return it to them. That’s too much work. I currently have the bulk of my savings in an ING Direct Orange Savings Account. Day to day cash is kept in a Charles Schwab High Yield Investor Checking account. I have small amounts of cash in Wachovia and JPMorgan Chase. Eventually I’ll need to close these accounts. I just haven’t gotten around to it.
I’ve been with ING so long, I actually trust them. They don’t pay the highest interest, but I feel pretty confident they won’t try to get me with a gotcha fee.
That’s sure a heck of a lot of accounts flexo!
Why not just lock some savings up in a 4% yielding 5-yr CD and roll with it? Use the “DVD Method To CD Investing” where you can maximize your yield.
Or, are we talking about different pools of money for you?
I always like to have between 4-6 months’ worth of expenses saved up in an “emergency fund” account I can tap into at any given moment. When interest rates were 6%+, it was worth it to transfer my money to whichever high-yield account offered me the highest rate. Now, as you said above, it’s simply not worth it for a mere few dollars.
To add to simplicity, my payroll is setup to direct deposit into my savings accounts and my credit cards automatically pull payment as well. Once interest rates start improving again, I suspect we’ll see a few banks pull ahead of the rest, just as we saw a few years ago. When that happens, I’ll likely move my emergency fund to take advantage of the higher rate.
Whew…yes simplify Flexo!
I, too, would suggest consolidation!!! Wachovia Personal Savings?!? and personal Checking?!? TD Bank Personal Checking, too!?! Why do you love Personal Crown Banking Relationship with Wachovia that requires $4000 in checking, savings and/or mma with diirect deposit; $5000 without; or, $10,000 among CD’s, deposit IRAs, certain credit/loan line? Does having your business at Wachovia help avoid fees for personal and business relationships? I know TD Bank has no fees, as long as you have $100 balance in your checking. The rest can be consolidated into you high yielding, fast money-moving in/out, accounts! Yes, for simplicity!
oops, I think i may have forgotten that you must have a Wachovia Custom Business Banking relationship…and that lets you get Crown, Crown Classic or Crown Select Banking for free…as long as you have $5,000 in qualifying business deposit balances or $50k in a combo of qualifying business deposits and outstanding loan balances. I do see you do get a few perks: (with the Personal Crown Banking Relationship), the free Premium savings account (rate=0.05%), free iincoming domestic wire;outgoing $25; free Wachovia line of credit (with Wachovia credit card) (but $10 fee per transaction charged to credit wachovia card treated as cash advance; and credit card will have cash advance fees), 2 free withdrawals at non-Wachovia ATMs (but no reimbursement of machine’s owner fee), free official checks, money orders, traveler’s checks and notary services, and free tiny safe deposit box.