Virtual banking, the big advantage?

[Fern]

I'm afriad this post in an earlier thread may go unnoticed, so am posting it here....

Virtual banking is a new concept for me. I've been to both the Virtual Banka nd ING sites, and i think i understand basically how it works, but in practice, how do people here use the account?

Since after the 30 day initial period it still takes up to 3 business days for a transfer to clear, how do you typically use the account? Do you just transfer the bulk of your checking account money there, then do, say, monthly transfers about a week before it's time to pay the mortgage or another big bill?

The 3+% is good, but i don't imagine it would make a big difference unelss you had a lot of money there. Granted, my current checking account pays no interest.

Just trying to learn how people typically use the account, how often they may do transfers back and forth and for what purposes.

[jmjj215]

I use it as an emergency fund, as my saving-for-a-house-down-payment fund. I don't bother transfering money in there that I will need in the next month, or two, or three even.

[meaghanchan]

I deposit checks to my checking account, keep enough in there to pay my bills and pay for other monthly expenses, and transfer whatever I'm expecting I won't need in the next month to my ING account. I usually transfer money to ING either once or twice a month. It might not seem like 3% is worth it, but if you can manage to get a $1000 emergency fund in there, you're earning $30.00 a year. It's not nothing.

[PrincessPerky]

Since I only get to drive to a bank once a week (I don't drive, and DH works so it is inconvenient for him to take me on a whim) I find that the three day wait is shorter than waiting for next Thursday most of the time .

\But truthfully I just put the minimum needed to get my bonus, and then put the kids cash in so they can have 'interest' a whole couple of cents of it .

[Fern]

OK, fair point. Right now, i keep about $5 to $7k in my checking account and occasionally make transfers to my mutual fund money market account, which is just my cash emergency fund, which i usually don't withdraw from unless i'm a) buying a new car or b) making transfers to my stock/bond mutual funds. So maybe i can uses the ING account in place of the money market account; i'll have to check and see what it's earning, probably less....

Thanks for the feedback.

[jmjj215]

you're earning $30.00 a year. It's not nothing

But it's so close to nothing - that's why I don't worry about stuff like that. You're talking about 8 cents per day...

I try and think as little about maintaining and administrating with my finances as possible; try and think more about how to make more money instead

[meaghanchan]

If I found 8 cents on the street every day, I'd certainly pick it up. Keeping 1000+ in my ING account where it's earning 3% interest, as opposed to in my checking account where it earns nothing, takes no time at all. If I transfer money, it takes me about 2 minutes once a month. I work hard at my job and have gotten 2 raises and 2 promotions in the past year. Thinking about how to make more money and thinking about where you put the money you have aren't mutually exclusive, and I'm not one to turn down free money.

[jmjj215]

That's true, they're not mutually exclusive. I do think though, that sometimes people chase after nickels and miss the dollars. Pardon my abrupt post above - I got a bit mouthy reading another thread and it carried over to here...

[Fern]

jmjj215, you didn't say anything wrong. I tend to agree with you about the importance of spending what limited time you have to think about these things to focus on those areas of your budget that could generate the greatest savings.

[gakline]

I look at it like is $30 worth it for 12 hours of my time. If I have to manage 2 accounts and spend time keeping up with another one. Even if I just spend 1 hour a month (logging on or reading my statement) is 1 hour worth $2.50? I don't think so. I can make more spending an hour a month working at my day job or selling a book on Amazon.

[BCompDude]

I use it as my slush fund, and for every other fund I can think of. It is rare indeed that I ever have to pull money out of ING (thats the point of it) since I keep all of the money for near future bills (next three months) in my local checking account--also where I keep my "Emergency Fund" if you will.

It is an extremely convenient way for me to save as I can--and have--set up accounts for any need that I want to save for, and distinguish from other monies I have put aside for other things. For instance, I currently have three accounts at ING labeled "Cat Care", "Car Fund", and "Long Term Savings". I have scheduled automatic debits from my checking account into each of those funds so I can seperate between my money set aside for car repairs/new car and those for my cats (not for food or routine care etc. but in case of an emergency operation). The amounts differ obviously as I don't need the same amount of money for a possible cat problem as I do for a new transmission but it forces me to save and it never forgets . And 3 percent may not seem like a lot but once you get in the habit of making continuing payments, you make interest on the money you put in as well--its compounded monthly. Think of the commonplace "snowball" theme used on debt, but for you!

Here is something I encourage you to try. Set up an automatic payment for 50 dollars (or more if you can afford it) bi-weekly. . .and then get back to me in a year. ING and other internet banks are a great way to SAVE money but IMHO are not suitable as a replacement for investing a portion of your money or as a place for your "Emergency Fund" as it takes a few days to retrieve the money--you want INSTANT access to those funds in case of an emergency. A savings vehicle they most certainly are--a "bank" to use to transfer money in and out needed on a timely basis they are not.

Also, I have thousands of dollars in my ING account and will continue to accumulate more (and people, when I was in debt I started SMALL, 10 dollars a month, keep at it!). If I kept that money in a regular checking or savings account as some previous posters imply--I would be LOSING money considering inflation--and I'm not into losing money. If you "save" 1k in a 0% checking account (my MATTRESS pays the same interest) you just LOST 30 dollars if inflation is at 3% in a year.

God Bless.

[34saving]

I have a feeling this might meet with some disapproval, but I have a credit card for emergencies and ING to pay off the credit card before any interest has a chance to accrue. I also have a little bit of very liquid cash, but the way I figure it any emergency that needs thousands of dollars will either take a credit card or give me a few days to pay (and allow me to transfer the funds.)

[jmjj215]

Seems okay to me 34. You're just getting around the lag between requesting money from ING and actually getting it in hand.

[BCompDude]

34saving, as long as whatever comes up allows you to pay by credit card--and you can pay that card off before any interest charges accrue--there is nothing wrong with that ideology. In fact, I use my credit cards for everything I can--down to McDonalds purchases--so I can track my expenses easily at the end of the month and I earn 1%-5% back versus nothing for cash. However; there are a few places that I frequent that for whatever reason still don't accept credit cards and in those (albeit rare) instances I would be out of luck if I relied solely on my credit card for my backup plan. I relish the day when I no longer have to write out paper checks--yuck!

An example would be the plumber--he doesn't carry around a credit card machine with him and requires payment before work commenses, hard to do with a credit card.

[34saving]

Weird. I think around here most plumbers do take credit cards . . . But I have enough in checking for a plumber. . . .and I know how to turn off the water

[BCompDude]

Lol, point taken.