Online Banking

I have been talking to a lot of people it seems about my adventures in online banking, and wonder of wonders, a few of my coworkers seem to be asking me for advice on saving.

It makes me laugh. Me, saving?

Not too long ago, the concept of having even a thousand dollars in an emergency fund seemed unattainable. I hardly know how I got there. It may be that the first time I reached--and stayed at over a thousand dollars untouched in my bank account was last year when I received my tax refund. I was refunded about $3400--most of it due to having taxes withheld at a rate higher than I needed to, and promptly put it into a savings account, at an online bank which I did not often use, so I would not touch it. I put some of it into a CD (Certificate of Deposit). And true to its name, the other $2400 was used when I became unemployed in October and the state of California was nearly 3 months behind in paying unemployment benefits. I had no income, and could not find a job. That is what emergency funds are for.  Since my EDD payments have come in, I have replenished my savings accounts over and beyond what I had last year, begun an IRA, and started investing some spare cash. All done within a few months, making very little money. I am proud of myself for scrimping and saving, and skipping eating out, foregoing shopping trips, taking the short way home. All so I can save.

Now that I have given my spiel--let's get to the good stuff. To save, you have got to have a good place to do it. I have found that I love my online banks. I currently have checking accounts at THREE banks, and my IRA is at a credit union. This is normal for me. I have always been someone to have multiple bank accounts because I use them for different things. I have four debit cards in my wallet. I have at least eight different accounts. I like my organised chaos. Because different banks meet different needs.

I'm going to guess you already have an account with a big bank. One like Wells Fargo, Chase, Bank of America, US Bank, etc. They're everywhere, have great hours, pay crappy interest, have high fees, ATMs everywhere, sales pitches galore, have been bailed out by the government, and we love to hate them but can't leave them.  I bank with Bank of America. I loathe them. They have horrid customer service. They pay 0.01%  interest on their Checking accounts if you, like me, have under $10,000 in the account. I use them for the convenience, and nothing else. I can deposit cash in their ATMs and their ATMs are every where. I also have my routing number and account number memorised. Seriously that's about it. But every time the state of California deposits money into my EDD account, which is with BofA, I take it out as soon as I can, because I cannot stand the idea of such a despicable business getting to hold on to thousands of dollars of my money and make a profit off me while they charge me high fees if I make a little mistake, or need to talk to a teller, etc. And they can't be bothered to pay me interest. It might cut into their bottom lines. 3.4 billion dollars and no interest to speak of

So, once I take it out of BofA, what do I do with it? I transfer it! To Ally, or CapitalOne360. Both have amazing customer service. Ally pays 0.25% interest on Checking and CapOne360 pays 0.20%--25 times and 20 times what BofA pays respectively.

Checking and Savings accounts are free at both Ally and CapOne and Savings bear 0.75% and 0.87% interest respectively. Bank of America doesn't even offer free savings unless you have at least $50,000 with them or meet certain minimum balance requirements, or make transfers. With Ally and CapOne, you just open an account, and put money in it (any amount) and watch the interest accrue. No funky rules to follow.

Capital One has slightly lower interest rates than Ally but it has plenty of its own merits. I prefer to use Ally for money that will be sitting around for a while and Capital One for my checking account that actually gets used, and the Emergency Fund that is linked to it for easy saving. My tax refunds go to Ally for higher interest, and my CD is with Ally. The customer service is spectacular at both, and I have never had a problem with either. I have been with CapOne360 since September of 2011, and for nearly 3 years I was being paid through their Person to Person transfer (this is back before Capital One bought the original bank, ING) I actually didn't like Capital One due to some earlier experiences with them, but I have to say, they have done really well. I have been with Ally at least a year and a half.

To open an account, you do need a credit history as I recently learned. It doesn't have to a good credit score. Just a credit history.  I tried to refer my cousin and help her open one. We went through the process of verifying her identity and everything, and they denied her because she has zero credit history. And when you open accounts with online banks, they do go through extra steps to verify your identity. It also takes a few days because you have to link to an existing account they will make a few very small transfers ( a few cents) back and forth to verify the account is actually yours and you are who you say you are. This is due to federal banking regulation under the US Patriot Act. It's nothing hinky. They really do need to get all that personal info.

Capital One 360 frequently has promotions. If you are interested in trying them out, and earning $50, leave me a comment, or send a private post on G+ and I can refer you. Who doesn't love free money? I started my account with a $50 bonus and it turns out they have become one of my favourite banks.