With all of the pundits complaining that the American public has a negative savings rate, I am proud to admit that our family does have a savings plan. There have been times when we needed to dip into our short-term savings to cover unexpected bills or expenses. As I mentioned in a previous post, we do have credit cards, but also unlike most other Americans, we do not carry a balance. I will be the first to admit I was the one in our family that was reluctant to use an Internet based bank. It took years (literally) for my husband to convince me that it was safe and actually profitable.
One of my very good friends sent me an invite from ING, last February. Indeed, ING's interest rate was much higher than my credit union and infinitely higher than the BB&T Bank in the town that I live in. In fact, I had looked into BB&T as a savings vehicle for me, as a place to easily deposit rebate checks, survey checks, etc., and was shocked that they offered me a checking account (earning 0% interest, by the way) as a stepping stone to a savings account! All I wanted to do was put a little money aside, but they required a few hundred dollars minimum balance to avoid fees. Excuse me? I thought that perhaps I had misheard the bank representative. No, I had heard it quite well enough and in checking with First Union, they had basically the same options for a savings account. No wonder Americans aren't saving! It is simply too difficult to start off unless you have a rather substantial wad of cash!
In the past year, I have been very pleased with ING. The invitation that my friend sent included a $25 bonus (reported as interest income via 1099-INT for tax purposes), so that was a big plus. In addition, the savings rate, though higher a year ago, is still more than my credit union by about 1.25%. In fact, the ING's Orange Savings has a higher yield than my own credit union's CDs!
The system that my husband and I have devised is that we keep a certain amount of money available to us in our savings account at our credit union, but just enough to cover any needs we might have to move money between the our savings and checking. Depending on when his pay period ends, there are times when we have several bills due (or those odd-ball ones that are every 6 months like our car insurance) and it is necessary to shuffle money around, kind of like a short term loan between the two accounts. Everything else gets transferred to our Orange account for long term savings. ING is also FDIC insured, guaranteed like the bank down the street. Sure, you are giving up easy access to a teller, but really, for savings accounts, you don't much need teller assistance. If you don't know an ING customer with referral love to spread around so that you can get the $25 bonus, ING often puts flyers in such magazines as Smart Money (at least 4 or 5 in the past year during my subscription) and Amazon includes them in many of the packages that I receive. Signing up with a $25 bonus offer form equals free money, as there is often no minimum to open the account. (In the case of my friend, we needed to fund our account with at least $250 to obtain the bonus, but we'd already planned to move at least that much money to ING anyway.)
Another friend of mine recently opened an ING and E*trade account at my suggestion while both were having promotions offering the $25 bonus. A free $50 for her and a higher interest rate than her bank could provide. So if you want your money working harder for you, keep your eyes open for offers like these and take advantage of them. It is very easy to fund an ING account by transferring money, much like PayPal. You do have to provide certain personal information (thanks to the Patriot Act!) but it is safe to do (I just wouldn't sign up at an internet cafe!) and is an excellent way to save. It takes just a few days to post to your account, no matter which direction you are sending it, so an online bank is an excellent way ensure you are earning a higher rate than average, yet easily transferred to your bank account should you need it for an emergency.
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