Goodbye low-interest banking

I’ve decided I’ve had enough of low-interest (or, more realistically, no-interest) bank accounts. I’ve had checking and saving accounts with Washington Mutual for years now and have nothing to show for it but a lack of the money I could have made in interest had I been somewhere else. Well, no more.

I started with my savings account. Well, technically Sarai started it by opening an Orange Savings account at ING Direct for our joint savings for a house. I’ve since decided to use this as my primary savings account. It pays 4.50% interest rather than the 0.50% or whatever it was that WaMu was giving me. No contest. The only disadvantage to this account is that electronic transfers to or from it can take up to a few days, so it’s not quite as convenient as a regular savings account, but I don’t expect this to be a problem.

My second step was to replace my WaMu checking account with another online-only account, this one from Schwab. Their investor checking account is an even better deal than the ING savings. It pays 4.25%, has no minimum balance, and comes with benefits like free checks and refunded ATM fees. That last one is important: An electronic-only account means using lots of third-party ATMs, but Schwab refunds all those $2 fees at the end of every month, so I don’t have to worry about finding the “right” ATM; I can just use the first one I find.

The down side to these online-only accounts is that I don’t have a physical bank branch to walk into. I can transfer funds electronically between these, and my paychecks are deposited directly into the Schwab account, minus the 15% automatically deposited with ING. Depositing checks is tricky though, requiring me to endorse and mail them to Schwab (but they even provide postage-paid envelopes and even personalized return address labels!). Checks I deposit into the small business checking account I’m keeping at WaMu for just this purpose. I need to keep a second account anyway for the occasional business income I make from consulting and this makes it easy to deal with any checks I get as payments and gives me somewhere to transfer Paypal payments that’s safely partitioned from my regular accounts. Money from any non-business-related checks can be transferred to my Schwab account after deposit here.

All this is something I’ve been needing to do for a while. One of my new year’s resolutions this year was to better organize and improve my savings and finances, and this is a big step in that direction. The next step is to replace my two credit cards with new ones that will give me something back. Most of my bills are automatically charged to one of them anyway so I should take advantage of the opportunity to get something out of it. I’ll write up my choices here once I finish making them.

Most of my personal finance inspiration comes from I Will Teach You to Be Rich, a really good personal finance blog written by Ramit Sethi here in the bay area. I’ve stripped down my RSS subscriptions to the essentials recently but this one is a keeper.

Comments

JoeBanker says:

Hey, just thought you should know that WaMu is now offering a 5.0% savings account (no minimums or fees). Was super easy to open online. If the ad for it is still on their homepage, you can click that but if not, you can go here which is where the ad took me. The offer is a combo package of their checking and savings, but you obviously wouldn’t necessarily need to use the checking portion (no minimums or fees on that either).

(offer link)

They let me move money like my ING account does as well (still takes a few days), but thought you might get to consolidate since you are still using WaMu for other stuff and get a bit better rate than your ING is getting you.

Kenn Christ says:

Interesting. I wonder if more banks will be following suit. Thanks for the tip.