We did it! After months of contemplation, talking to others, and research, we opened up our first two ! For us folks who are stuck back into the "Dark Ages" and prefer to deposit our checks manually at a bank where they know us by name, switching to online savings accounts was quite a big deal.
Why did we do it? Well, for a variety of reasons but the main one was that the percentage we could save with an online banking account was substantially higher than anything offered to us at our local bank. While our largest account at our local bank (currently our six-month emergency fund) is earning almost 3% in interest, this is only because it is a larger amount of money. Our small savings accounts are earning hardly anything.
In order to bump up our earnings, we’d need to put them into some type of high-interest-earning savings account (CD, mutual fund, etc.) which might earn more but it wouldn’t be easily-accessible and good for short-term savings. Opening up online savings accounts would allow us to move those smaller accounts into a much higher-earning account, without losing the ability to access them when needed–which is what we wanted for these smaller accounts.
We were considering opening up our accounts through ING; however after some research, we landed upon (FNBO) and discovered that they offer 3.5% interest on all savings accounts of any amount. This is 0.5% higher than anything ING offers and there is no minimum deposit or fees attached. Plus, FNBO has been around for over 150 years with a very proven track record.
Opening up our savings accounts was very simple to do–we didn’t have to drive to a bank or wait in line which was an added bonus! Within a few days, everything was taken care of and we transferred the funds over (you can send in a check, but we chose to transfer our funds electronically).
We chose to open one account with our tax savings in it. Since I’m self-employed, we put 30% off all of my earnings into a savings account for tax purposes. The goal is that I won’t need to pay that whole chunk of money in taxes–I usually get to take a number of deductions–but it’s saved up to give us plenty to work with come tax-paying time!
Once we pay our taxes out of this account, we plan to dump whatever is left–including our 3.5% interest–into our house savings. We’re hopeful it will be a nice little somewhat-unexpected bonus to the house fund!
We opened up our second online savings account specifically for vehicle savings. Both of our vehicles are quite old, have lots of miles on them, and have been limping along recently. We decided to designate a portion of the income we are earning from some extra online endeavors towards our car savings fund. Since these are extra online things we recently started, the income earned from these won’t be eating into our household budget nor will using it to fund our car savings account really cause our current house savings plan to slow down.
I’m anxious to see how much we can accrue in these accounts by the end of the year! For sure, the will be a great boost!