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Banking

Back in the day, we had just one savings account. Mine came with a passbook. Now we ask–how many savings accounts do you need? We have the answer.

how many savings accounts do you need

These days, more banks are offering low- or no-fee savings accounts. This can make it tempting to open a lot of different accounts. And, in some cases, having multiple savings accounts can be a good idea. But there’s also a time to keep things simple.

So just how many savings accounts does it make sense to have? Well, it’ll all depend on your particular situation and how segmented you want your finances to be. Here are some of the things to consider when it comes to how many savings accounts you need.

Pros and Cons of Multiple Accounts

Before we dive into deciding how many accounts to get in the first place, let’s look at some of the basic pros and cons to a multiple savings account approach.

Pros of multiple accounts

  1. Better goal tracking: This is the primary reason my family keeps multiple savings accounts. It makes keeping track of our savings progress and goals much easier.
  2. More separation of finances: We’ll talk more about this in a moment. But, basically, keeping money in separate accounts keeps you from accidentally spending your new car money on your vacation, for instance.
  3. Micro-control over deposits: If you want to save $50 a week for vacation and $30 a week for Christmas, multiple accounts makes that easy. When you’ve met your savings goals, you can then stop making deposits to those accounts. Yes, you can do this with your savings all in one account, too. But multiple accounts makes it easier, I think.

Cons of multiple accounts

  1. Potentially more fees: If you’re paying for the privilege of using each of your seven savings accounts, you’re doing it wrong. There are too many good, free options on the market to pay hefty fees for this strategy. But you do need to be on the lookout when opening new accounts.
  2. Potentially lower interest rates: This will likely only come into play if you maintain thousands of dollars in savings. Many accounts offer an interest rate bump when your average account balance passes a certain threshold. Separating out your savings can make each balance below this threshold so that you don’t take advantage of the interest rate bump. This is something to keep in mind as you overall savings becomes more substantial.
  3. More to manage: We’ll talk below about good ways to keep this strategy from getting too hairy to manage. But know that it will take a bit more work from you on the front end.

How Much Separation Do You Need?

Some people are really good at setting aside money as part of a larger account. For instance, you might have $500 in a savings account. You know that $100 is for your next vacation, $200 is for your next car, and $200 is for one-off expenses. If you’re good at keeping track of that and not spending money earmarked for other purposes, that works great.

In this case, you may just need two savings accounts: one for emergencies, and one for everything else.

But what if you’re not that great at this method? Maybe you need your money to be a bit more separated so that you are sure to spend savings for its intended purposes.

This is how my family is. I don’t like keeping track of earmarked money all in the same account. So we segment our savings with completely separate accounts. For instance, right now, we have accounts for emergency savings, travel, Christmas and birthdays, and one-off expenses. The accounts are all free, so it costs us nothing to segment our savings in this way.

You’ll need to determine based on your money management style what works best for you.

Also, keep in mind that some banks offer a middle ground option. For instance, PNC Bank offers its wallet system. This lets you earmark money for different purposes, even though it’s in the same account. Budget systems like YNAB let you do this in your budgeting system, as well.

One of these options can help you keep track of what you’re saving for, even without having multiple accounts available.

What Would You Use Multiple Accounts For?

When thinking through this question, the key is to keep balance in mind. You don’t want to open fifteen savings accounts just because you have fifteen different short-term savings goals. That would be difficult to manage, at best. But you might decide to create one account for short-term savings goals and one for long-term goals, for instance.

You may already have an idea of which accounts you’d like to open. But here are some ideas of the various things you might use savings accounts for:

  1. Emergency Savings: This one is a must-have for any saver. You should stash your emergency savings account in a high-interest savings account. Keep it accessible, but consider separating it from your primary checking account. This reduces the temptation to transfer money when it’s not really an emergency.
  2. Long-Term Savings: What counts as long term? That’s really up to you. You could consider any goal that’s more than a year or two out as a long-term savings goal. This account could include savings for things like a down payment for a home, a big vacation, or a new car.
  3. Short-Term Savings: Do you have a savings goal you can reach in just a few months? Maybe your annual family vacation or some new furniture? You might consider opening an account for shorter-term goals like these.
  4. One-Off Expenses: This could also be an additional free checking account. But it’s where you can put money for expenses you pay annually or quarterly. For instance, I use this account to stash money for our annual car registration and taxes.
  5. Specific Goals: You can also open savings accounts–as long as they’re free!–for specific savings goals. This can make it easier to keep track of all of your short- and long-term goals. For instance, my family has an account specifically for Christmas and birthdays. We also have a separate account for vacation savings. This gives me an at-a-glance view of how much we have saved for specific goals.
  6. Credit Union Relationships: Many times, credit unions have much better lending rates than banks. But to access a credit union loan, you may need to keep a bank account open there. If you have a local credit union you like, open a savings account there. Stick enough money in it to avoid fees. Then, just let it sit. You’ll then have access to the credit union’s lending products (most of the time). But you can put your other savings accounts elsewhere if those other locations are more convenient.

However you decide to use multiple savings accounts, it’s important to think through the details on the front end. You don’t want to keep opening new accounts and then having to close them because you simply aren’t using them. It’s better to begin with a plan and then go from there.

How Can You Manage Multiple Accounts?

So how do you go about actually managing all of these accounts? Well, you’ve actually got a few options here. Which one you choose will depend on the number of accounts you open, the goals for your accounts, what where you open your accounts. Here are a couple of options for managing multiple savings accounts:

Open them at the same bank

Opening all of your savings accounts with the same bank is a good way to get an at-a-glance view of all your accounts at once. It also makes your life easier. You can quickly transfer money from your checking account to one of your savings accounts. And you can transfer it back again if you need to do so.

Our multiple savings accounts are all with Huntington Bank. They’re all free. And when I log into our account view, I can see quickly how much we have in each account.

Having all your accounts with the same bank is convenient. But it doesn’t let you take advantage of the best deals and interest rates around. Plus, attaching your emergency savings account to your primary checking account isn’t always a good idea. So consider opening this account at a separate location, especially if that also lets you get a better interest rate.

You can also take a hybrid approach here. For instance, you might decide to keep your one-off expenses and short-term accounts with the bank that has your checking account. If money is revolving in and out of these accounts more quickly, you don’t need to worry about the interest rate as much. But then you can put long-term savings and emergency savings elsewhere, so you can take advantage of good interest rates.

If you do this, just get into the habit of transferring money from your checking account to your long-term savings and emergency accounts. Better yet, set up your automatically deposited paycheck to put money into these accounts on payday.

Use a good budgeting program

Another way to manage multiple accounts, even if they aren’t at the same bank, is with a good budgeting software. Options like Mint and YNAB will automatically pull in your account balances. So you can get an at-a-glance view of accounts that aren’t at the same bank or credit union.

These programs can also help you keep track of savings goals using these accounts. For instance, when you set up a savings goal with Mint, you’ll link that goal to a specific account. As you save money, Mint will tell you how much progress you’ve made. If you want to save a certain amount by a specific date, it’ll let you know how much to put into the account each month to reach your goal.

My suggestion would be to use a budgeting program that pulls in your account balances automatically. This is especially helpful if you are juggling multiple accounts. Otherwise, you’ll find yourself logging into several different online banks to get a picture of where your accounts are.

How Much Are You Paying for the Privilege?

Finally, be sure that you completely understand the fees involved with maintaining multiple savings accounts. As I said above, our accounts with Huntington are all fee-free. If they weren’t, I definitely would not maintain that many savings accounts.

Sometimes it’s worth your while to pay some small fees in order to access much higher interest rates or other privileges. But with all the fee-free accounts available, even high-interest accounts, it’s usually not worth your while.

If you have a higher balance to stash away, you can likely get out of paying more fees. But, again, just be sure you understand how much you’re paying to maintain multiple savings accounts, across the board.

Check Your Strategy Frequently

As with everything in life, there’s a time to go with multiple savings accounts and a time to pare things down. Be sure to check in on this strategy frequently to be sure it’s working for you and your family. I would suggest at least an annual check-in of your savings progress, fees, and management style. But it’s probably better to evaluate this strategy every few months.

How many savings accounts do you have? What do you use those accounts for?

For low fee, high rate savings accounts, consider one of these options:

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CIT Bank bonus offers can be very rewarding. We track these bonuses and CIT rates, which currently are the best you’ll find for an online savings account.

cit bank review and cit bank bonus

Everybody needs a safe place to tuck away their emergency fund or vacation savings. A high yield savings account is a great option. Considering that the average savings accounts earn a measly 0.06%, however, you’ll want to make sure to find the absolute highest rate that you can.

This is where CIT Bank comes in. You may not have even heard of them before. The small bank was founded in 2009. However, they are hanging with the likes of GS Bank and Ally by offering an excellent online savings account rate of 1.35%. Tack on a great set of returns on their CD products and CIT ranks as one of our favorite online banks.

CIT Online Savings Account

CIT Bank’s high-yield online savings account offer competitive perks, including the obvious–a great APY–as well as $0 maintenance fees on your account.

CIT currently offers a 1.35% APY for all bank balances under $250,000. Beyond $250,000, the APY decreases slightly to 1.30%. The minimum deposit required to open a CIT online savings account is only $100 and there are no account minimums to maintain.

To be clear about the APY, the rate you receive depends on your total balance. If you have $100,000 in your savings account, you’ll receive the 1.35% rate. If you have $300,000 in your account, you’ll receive the 1.30% rate. You will not receive the higher rate for the first $250,000 in your online savings account–the APY is for your full account balance, not any partial amount.

CIT Certificates of Deposit (CD’s)

CIT not only provides a great rate on their high yield savings account, but they also have a great line of CD’s. In fact, CIT has five different CD products to choose from.

  1. High Yield CDs–Ranging from 6-months to 5-years, you can invest in a CIT CD with standard terms. To be blunt, these are the weakest of the CD’s offered by CIT. The interest rates are not as strong as they are with other banks and the term lengths are boring. The minimum deposit amount is $1,000.
  2. No-Penalty CD–CIT offers customers a no-penalty CD for a period of 11 months. This CD allows you to withdraw your balance plus interest any-time you wish, after the first six days without an interest penalty. The current APY on this 11-month term is 1.55%, slightly better than the savings account. Minimum deposit to open a no-penalty CD is $1,000.
  3. RampUp CDs–One of the more intriguing CD options, the RampUp Plus CD allows you to increase your CD rate once per term. If during your term CIT is offering a higher rate than your current rate, just tell ’em and they’ll ramp it up! CIT currently offers this type of CD in a three year term at a 1.20% APY and a four year term at a 1.38% APY.
  4. RampUp Plus CDs–Similar to the RampUp CDs, there are two stark differences to the RampUp Plus version. First, the CD terms are shorter. The 1-year CD has an APY of 1.26% and the two year CD has an APY of 1.27%. Second, you can increase your deposit once as well. Ramp up your CD rate once, and ramp up your deposit once.
  5. Jumbo CDs–If you have at least $100,000 to deposit with CIT, you can take advantage of higher CD rates. Higher than what you might ask. Well, higher than their standard high yield CD rates. Once again however, the rates are still not up to par. For example, a 2-year Jumbo CD has an APY of 1.45%. Why not just park your money into an 11-month no penalty CD, which currently offers the same rate?

CIT Bonus Offers

Sorry to say that CIT currently has no bonus offers available. Earlier this year, they were offering up to a $400 deposit bonus for new accounts so it’s always smart to check back every so often. If you’re specifically in need of a savings account with a bonus offer, check our best bank promotions page.

Is CIT Bank Right For You?

If you have some savings that you’d like to tuck away in a high yield, online savings account–such as your emergency fund–CIT Bank is worth a look. CIT consistently ranks as the best or one of the best banks for high interest savings. If you’re looking for a deposit account and can’t find one with CIT, you’re likely doing it wrong!

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We’ve tracked bank rates since 2008. The latest list shows the best bank interest rates available nationwide as of November 2017 (with daily updates).

best bank rates

Since many banks are constantly updating their interest rates offered on savings, money market and checking accounts, this chart should come in handy. On the 1st of every month, this page is updated to show the most accurate rate information available.

Banking Deal: Earn 1.30% APY on an FDIC-insured savings account at Synchrony Bank.

This list is organized in two sections. The first section includes FDIC-insured savings or money market accounts and the second includes FDIC-insured checking accounts. Each list is sorted alphabetically and unless there is a notation listed, the APY rate applies to all amounts.

Current rates

Use the table below to search for current interest rates available on money market accounts, savings accounts, and certificates of deposit. For historical rates, scroll down.

Historical interest rates

Banks that have lowered or raised their rates in the last month are shown in red and green, respectively.

Bank Account Name Tier Notes 11/1/2017 1/1/2017 1/1/2016 1/1/2015
Synchrony Bank Online Savings All No minimum balance 1.30% 1.05% 1.05% 1.05%
Ally Online Savings All No minimum balance 1.25% 1.00% 1.00% 0.99%
Ally Money Market All No minimum balance 0.90% 0.85% 0.85% 0.85%
American Express Bank High Yield Savings All 1.25% 0.90% 0.90% 0.80%
Barclays Online Savings All 1.30% 1.00% 1.00% 0.90%
Capital One 360 Online Savings All Formerly ING Direct 0.75% 0.75% 0.75% 0.75%
Discover Bank Online Savings All 1.20% 0.95% 0.95% 0.90%
GS Bank Online Savings All No minimum deposit 1.30% 1.05% N/A N/A
Everbank Money Market $5k to $10k Includes 1st year intro rate 1.31% 1.11% 1.11% 1.11%

Savings Account Rates

As you review the current and historical rates for savings accounts and money market accounts, keep the following in mind:

  • Fees: The best offers come with no monthly maintenance fees. Even a small fee can wipe out much of the yield, particularly in the current low rate environment. Before opening an account, make sure you understand what if any fees you’ll pay. The best savings accounts don’t charge fees.
  • Minimum Deposit: Many bank accounts require either a minimum deposit or a minimum balance going forward, or both. Be sure you know these requirements as you shop for the highest yield.
  • Tiered Rates: Some, but not all, banks offer tiered rates based on the amount of your balance. While one might assume that the rates go up as the balance goes up, that’s not always the case. Some banks actually lower the rate for balances over a certain limit.
  • Online Banks vs Traditional Banks: As a general rule, online banks offer the highest rates. Many brick and mortar banks offer yields as low as 0.01%. It’s as if they don’t want your money. In contrast, online banks offer yields of 1.00% APY or more.

Checking Account Rates

With checking accounts, the interest rates tend to be lower. That’s generally fine because most people don’t keep a lot of money in a checking account. Any extra money one has should be moved over to a high-yield savings product. That being said, many banks do offer interest checking accounts. Here it’s critical to consider fees, which are more common than on savings and money market accounts.

Finally, if you know of other bank accounts or deals we should include in our list, please leave a comment below.

I’ve banked with Ally Bank for years, opening both a savings account and CD. In this Ally Bank review, we’ll look at rates, fees and account types.

Ally Bank Review

Just over ten years ago, General Motors was having trouble remaining in business. Its subsidiary that provided customers financing for automotive purchases, GMAC, converted to a bank holding company. The goal was to take advantage of the Troubled Asset Relief Program (TARP).

In return, it received $5 billion from taxpayers through the government. By this time, GMAC Bank, a division of GMAC, already offered retail banking. Its products included savings accounts, certificates of deposit, and money market accounts.

In an attempt to distance itself from the faltering GM brand, GMAC Bank re-branded itself as Ally Bank. It focused on offering a high-yield interest product. And it began actively seeking new customers and depositors. Later, the bank’s parent company, GMAC, also re-branded itself to become known as Ally Financial. Today, Ally Bank offers some of the most competitive banking products around.

Opening an Account with Ally Bank

Here are my experiences from the Ally Bank account opening process. As I visited the website to begin my application, Ally Bank warned me that I would need my driver’s license (or an alternate state or military identification number) in addition to my Social Security Number to proceed.

Like some other banks, Ally performs a credit check to verify identity. But they may also reject your application if they see you as a credit risk. However, getting rejected because of your credit history is unusual. But since this bank was once a financing company and then a bank holding company, this strategy may become more prevalent.

It look less than two seconds once I submitted my application for Ally Bank to inform me my application was approved. Once inside this virtual gate, I was able to choose whether I wanted to receive paper or electronic statements. I always choose electronic to cut down on paper waste. I wish more services would offer this option from the beginning.

Here’s another great feature: I can create as many separate savings accounts, with their own account names and numbers, as I want. At this point in the initial set-up, I could also add money market accounts and certificates of deposit.

I set up two separate savings accounts, both to be funded electronically from my Citizens Bank checking account. Like configuring linked accounts at any other bank, I will be required to verify two small deposits to ensure I am the owner of the linked account. Options for a one-time initial deposit or a recurring automatic savings plan are available.

Ally Bank then required me to create my security settings for viewing my account information and activity online. The bank has combined most of the security features that have become commonplace over the past few years. I created a username and a strong password, including mixed case letters and numbers.

Then I selected some secret code words and an image I can expect to see each time I log in. I also chose three security questions and answers. Ally provides the option to register the computer you use for accessing the website. This avoids repeated security questions at each online session.

If Ally Bank does not recognize the computer you are using to log into your account, they will send you an email with a single-use password to further confirm your identity. I have not seen this feature implemented anywhere else.

Using the Ally Bank Savings Account

Once logged in, I was impressed with the clean look of the interface.

You can transfer among your Ally accounts and two and from other accounts for free. But keep in mind, for money market and savings accounts there is a limit of six withdrawals per period, due to government regulations.

Ally Bank charges no account maintenance fees and requires no minimum balance. If you exceed the six withdrawals mentioned above, Ally will charge a $10 fee. Cashier’s checks and wires carry an additional cost. A returned deposit item, if a check you send bounces or if you don’t have funds in an external account to cover a transfer, will cost $25.00

The bank is also drawing attention to their 24-hour customer service availability and the plain language used throughout their website. I have not yet worked with Ally’s customer service, but I will be sure to report any future frustrations.

Ally Bank Products

High Yield Savings–This is the best product Ally has to offer in my opinion. The current APY is a robust 1.20%. Ally routinely ranks in the top 1% of all banks in terms of two very important factors: interest rate and customer service.

Interest Checking–It’s not easy to find a high yield online checking account these days. Ally tries their best, God bless ’em. For balances less than $15,000, Ally offers a 0.10% APY. And for balances greater than $15,000, the APY is a much more respectable 0.60%. Either way, Ally charges no monthly maintenance fees, which is rare today when looking for a high quality checking account.

CD’s–If you don’t mind losing a little liquidity for a higher interest rate, a CD is a great option for better returns. Ally has a wide variety of CD options, including high yield CD’s, a raise your rate CD, and a no penalty CD. The no penalty CD is perhaps their best offer, providing a 1.50% APY on balances of more than $25,000.

Money Market–Money Markets have always puzzled me. You see the interest rates above for CD’s and checking. And then you check the Ally Money Market account, and it earns a 0.90% APY on all balances. What would possess someone to open a money market account vs. a savings account? The Ally Money Market account does provide a debit card and the use of checks if needed. But you’re sacrificing a lot of interest for a touch of convenience.

Ally Invest–Ally recently purchased the online discount broker TradeKing and absorbed its business. Now, you can not only open a deposit account, but an investing account with Ally Bank. Trades are charged at a flat rate of $4.95, and options contracts run you $0.65 per.

Is Ally an Ally of Your Personal Finances?

ally1

Opening my account with Ally Bank was painless and quick, and I like how the website operates so far. After my initial deposit transfers, I will have a better idea of how quickly funds are available and can be transferred back to external accounts. I will return with more information at that time.

The main question I have moving forward is how long Ally Bank will be able to maintain their position as one of the highest among high-yield savings accounts. Banks have long used high interest rates to lure new customers, only to drop the rates when they become confident in their position as leader.

The American Bankers Association (ABA) sent a letter on May 27, 2009 to the FDIC requesting that Ally Bank be forced to lower their deposit interest rates, citing the bank’s unfair competitive advantage. It is unfortunate that the ABA would take this stance with savers forced to settle for interest rates that will not reach the rate of inflation going forward. The ABA has since removed the letter from the organization’s website, and I would suspect top tier interest rates so long as Ally is in business.

If you are interested, apply for an Ally Bank savings account here and let me know about your experience by commenting below.

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A Review of the SFGI Direct Savings Account

by Michael Pruser

In our SFGI Direct savings account review, we were frankly surprised at the high rates offered by this bank many have never heard of. It beats almost all existing online banks. Here are the details. If you haven’t considered an online savings account before, here’s why you should now. Below we review the SFGI Direct […]

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Synchrony Bank Review and Interest Rates

by Adam Luehrs

We’ve reviewed countless banks. Our review of Synchrony Bank led to one inescapable conclusion–Synchrony bank offers some of the highest interest rates on savings products. Coupled with low fees, it’s an excellent choice for savers. The main reason why people use Synchrony Bank is its ability to deliver higher-than-average interest rates. Of course, the nice […]

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Amboy Direct eSavings Account $50 Bonus Review

by Adam Luehrs

Amboy Direct offers an eSavings account with a competitive rate and a $50 bonus. Get all of the details in our Amboy Direct review. There’s a chance to get a cash bonus of $50 if you’re planning to open a new interest-earning bank account. Amboy Direct is offering a limited-time bonus for new customers of […]

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Today’s Best Bank Deals, Promotions, and Bonuses

by Stephanie Colestock

Get the best bank bonuses, promos and deals with this regularly updated list of bank signup promotions. When opening a bank account, there are a few things you should be looking for: low (or no) fees, the highest interest rates possible, and promotional bonus offers. With the latter, you can often score free money without […]

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Best 12 Month CD Rates of 2017 (Updated Daily)

by Michael Pruser

We track the best 12 month CD rates of 2017. You’ll find information on fees, penalties, and minimum deposits for these certificates of deposit, too. If you compare today’s best 12 month CD rates with historical rates, they may not be impressive. With the Federal Reserve keeping interest rates low for the near future, deposit […]

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Wal-Mart Offering Check Cashing Services

by Luke Landes

Walmart checking cashing service offers a low cost way to cash a paycheck. But is it the best way to get paid? We give you several free alternatives. Google the words “cashing checks.” Below the paid ads and a Google map of various check cashing locations in your area, you will find Walmart.com. A one-stop […]

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