Online Savings Accounts

As an experiment, I opened an account at ING Direct last June. I've used the same credit union for 14 years, all of my car loans have been through them, and I've been completely happy with everything I needed to do there. The thought of earning a bit of interest on my savings through an online account caught my attention, though. So I transferred most of my savings into a bank that I can't walk into, got the $25 sign up bonus, and went on my way with my traditional set up.

Until a $5 fee started coming out of my credit union's checking account every month. It took me a little time to figure out why I was paying a $5 "maintenance" fee.

I finally realized that since:
A) I had paid my car loan down a significant amount, and:
B) I wasn't storing my "extra" money in those accounts anymore, that:

C) the sum of my balances had crossed some magical number that means they're charging me $5 to bank with them.

I'm still on the fence about getting rid of these brick-and-mortar accounts completely. I've been with them for over 14 years, I know the people at my local branch, I'm comfortable with their services - and when I need a car loan in a couple of years, I know I'll get a great rate through them.

In the meantime, I've started using my ING account a LOT. Exactly 40% of every paycheck goes into this account for my student loans; since that money has to sit in an account somewhere until it's due every month, I decided to start making money on it while it's sitting there twiddling it's thumbs. It's only about $2-3 a month. But that's $2-3 more than my traditional savings account was paying me (for comparison, I was making about 15 cents every three months at the credit union).

Then I realized I could set up multiple accounts with them. So I opened another savings account, which gets $25 of every paycheck, for car maintenance (anything more than an oil change). I drive 126 miles a day to work and back, my car is 7 years old and it just crossed the 180,000 mile mark - it's got some maintenance in it's future. This is a fairly new savings account, but the next time I need a couple of tires I don't want to have heart tremors as I write the check.

The Professor opened his own account (our finances are completely separate, one reason that I think we live in world of wine and roses) - which netted me a $25 referral fee - and keeps the majority of our Emergency Fund there. He thinks it's his savings account for a new Harley in a few years, but since he won't take out any money until he has twice as much as he needs...well, as long as he's putting money in a savings account, I'm not going to quibble about psychological motivations.

A couple of months ago, I took the plunge and opened a checking account through ING. At the moment, this is really just another savings account. I've transferred a wee bit of money in there, and paid a couple of bills through it to try out the interface - but until I get my checks direct deposited there, it's just a savings account earning slightly less interest than the others.

And finally - well, finally for now - I'm planning on opening another sub-account when I pay off my car in a couple of months. I'm going to keep making car payments - just into my "Car" savings account instead of to my credit union. I'm already salivating at the thought of a nice fat down payment on my next car - if I can't wait long enough to just outright pay for it. But isn't there something about counting pre-hatched interest payments?

Two notes:
I'm contributing this to We're In Debt's Group Writing Project.
If you want to use my referral link to ING - you'll make $25 and I'll make $10 - send me a note through the email addy on the side bar.