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?
Updated September 2, 2011 and originally published February 8, 2010.