Optimize our banking

[zetta]

I'll admit I've been a bit lazy with our banking, not really pursuing the highest interest rates. I've been thinking about switching to one of the online banks, and thought I would ask for your thoughts on how best to optimize for both convenience and return.

Currently we have the following in our accounts:
Wells Fargo PMA Prime Checking: $5,300 at 2.6% interest
Wells Fargo Market Rate Savings: $10,800 at 0.45% interest
Scottrade Money Market: $15,000 at 3.02% interest

The basic intent is that mortage, credit card (paid in full), utilities, and a small amount of debit card transactions (costco and gas) come out of the checking, while the savings holds the money for large periodic bills like property taxes, insurance, and planned big purchases (such as a vacation or a laptop). (When I set it up this way savings had a higher interest rate -- this changed when Wells gave us an upgrade on the checking account due to having our home mortgage with them.) Salary is direct deposited into checking, and $675 is transferred automatically to savings each month. The Scottrade account holds our emergency fund and also some stock investments and IRA's not listed here.

For convenience, I like Wells Fargo's ATM network, and withdraw about $360-$400 cash per month. I use billpay to pay the mortgage, car loan, and HOA bills, and have automatic draft for the water, electric, phone, and cell phone bills. I also pay the credit card bill by electronic transfer. About $6k flows through the checking in a typical month, and savings takes big hits in December, March, and June (about $5k, $3.5k, and $2.5k, respectively)

What would you suggest that I do to optimize our banking return without sacrificing the convenience of ATM access and automating all the monthly bills? I'm open to a mix of local and online accounts if I don't have to constantly work at shuffling money around.

[kv968]

I'd say keep the checking with the direct deposit where it is since that isn't a bad checking rate but move all the savings to a high-yield MMA. GMAC's MMA offers ATM and check writing. You can't go over 6 withdrawls per statement period but that shouldn't be a problem for you if you just use it for the big, infrequent checks you write. I'd also move some of the Scottrade account also if you're not planning on using it to invest anytime soon. You could always transfer it back.

If you do choose to close or limit your savings account with Wells Fargo just make sure that in doing so they don't take away your current checking interest rate. Although moving to a higher MMA would pay more than that even if they did lower your checking interest rate.

[carsensejoe]

your checking apr is pretty good
you should take some of savings and put it into a better interest bearing account like a cd.......with your money market 3.5 is weak i would look into s&p 500 index if you wana save for retirement

[b4freedom]

I have a netbank checking and MM account. However, I'm looking to switch banks because this one seems to be hurting big time from the sub prime market. GMAC is also hurting because of the sub prime market. Although my money is FDIC insured, I don't want to deal with that if that ever happened. I had an auto loan with Netbank and they sold off that part of the company without notice. One day I could track it online, the next it was gone, and no explanation. It's auto deducted from my account. But, if I change my information, I don't even know who to notify. (I was sort of wishing they forgave it or some computer error deleted it.) Before recently, I think Netbank was one of the best online banks out there. I recommended it to everyone. Now, I'm not so sure.

I looked at citi bank checking accounts. But they have tons of little "gotcha fees" like $1.50 after the first 6 ATM transactions (including their own ATM's). The rate may be great (4.6%), but I don't want to be had by stupid other fees. No thanks.

I looked at ING's new online checking account. Again, great rates, but no real checks. I use them maybe 4 times a year. They argue that you can send checks online. But, sometimes you just need a check in your hand to give someone. For example, you want to buy a car, you want to negotiate. It's hard to negotiate with a pre-written check you got online. It's hard to negotiate with, “Give me a car now, the checks in the mail.” Or better yet, you have no cash, you're running late, and you need to be at the DR office in 15 minutes, so you just grab the check book. How does ING help you in that situation. Of course they argue that you can have two accounts. Blah...

I'll have to check out Wells Fargo...

[b4freedom]

Yo!

I looked online at the Wells Fargo Checking and they charge $25/month on accounts with less then $25,000. Are they charging you that? That's craziness.

[zetta]

No, I'm not paying $25 per month. For some reason, Wells Fargo counts some part of the mortgage balance toward the $25,000 minimum.

Does ING have the bill paying features I'm looking for? Or would I be better off keeping the main checking where it is and moving just the savings online?

[ktmarvels]

I have an ING savings account. When situations arose where I needed to pay with a physical check, I just transfered the money into my checking account and wrote a check. I did this for my tuition bill. I knew when it was due so I'd just transfer the money and it would be available a couple of days later.

So you could do the same thing keeping your Wells Fargo checking (since it has a good rate and you like them), but keep your savings in an ING account.

[MonkeyMama]

I would keep your 2 WF accounts then and shop for an online MM. Most, though not all, allow transfers between your checking and online MM at no charge, electronically.

I recently opened an account with GMAC. I am really pleased as I can write checks out of the account as well (for bigger bills like property taxes). My system is a lot like yours. I keep enough in checking to pay all the day-to-day bills, a few hundred dollars in my institution's low-interest savings to cover overdrafts, unexpected bills that need to be paid right away, etc., and the rest gets transferred electronically to the high-yield MMA. Since I am still building up our savings I transfer in money twice a month, and at most once a month I take money out or write a check for a bigger bill. You do have to be careful on the 6-transaction limitation with these MM accounts is all. But overall for your purposes, shouldn't be an issue.

I also have an account with Virtual Bank. They are paying closer to 4.5% right now, GMAC is 5.10%. I am very particular and those are the only 2 online banks I will consider for now. FDIC insured, long history, no fees, low minimums, etc. You can do a lot of research on bankrate.com for best interest rates and bank ratings, etc. A lot of them charge fees for ACH transfers, so just be careful. But overall it has been pretty seamless/easy to keep most of our money in there earning higher-interest. The only downside I have found is it takes a good 2-3 days to transfer money back and forth, so I started leaving some in my local bank's savings account "just in case."

If WF is not charging you any fees, I don't see why leave. But overall I am a much bigger fan of credit unions, for checking accounts. They tend to have less fees in general, and most of them network with other CUs to offer free ATM withdrawals. I know a lot of people believe that banking with a CU means paying ATM fees, but really I find the opposite quite true - I can find a free ATM anywhere, no searching for that specific bank. Just a heads up - CUs tend to offer better interest rates too. Of course there are exceptions to the rule, but shop around. For now I have everything automated and no fees whatsoever. The only caveat is I did switch a few months back to a MUCH bigger CU And am much more pleased with their online billpay and the convenience of having so many branches. So maybe bigger is better.