Savings in a separate bank than checking?

[EllaMinnowPee]

Hi, I'm a newbie so forgive me if this is a stupid question. I am considering switching banks. The bank we have been using for years does not give us much, if anything, in the way of interest. We have our checking, savings, and a small home equity loan there. However, because of their low/no interest rates, I would like to switch our checking to a local consumers credit union, which offers a 5.09% interest rate on checking accounts, and our savings to ING, which has a 3% interest rate. Do lots of people separate their checking and savings like that, and if so, is it difficult to have your accounts in different places? Thanks for any advice!

[sweeps]

Yes, many people do that.

But I have a stupid question... if the credit union is paying 5.09% on a checking account, why would you put money in a 3% savings account?

[skydivingchic]

I have several different accounts to take advantage of good rates and still be able to deposit checks/cash at a brick and mortar branch. Here is what I do.

Brick and Mortar bank - Washington Mutual
Checking account - a free checking account with free checks. Nothing gets direct deposited here, I only use it to deposit checks/cash and then send it out to my other accounts. This account is tied to all my other accounts electronically, so that I can make transfers in and out. Money for the mortgage and HOA fee, which are the only things I regularly write paper checks for, is automatically transfered from my primary checking (see below) into this account each month so that I don't have to buy checks.
Savings - Wamu offers online savings account (currently 3.3%) for customers with a checking account. I am able to make deposits to this savings account in person at a branch. This is my emergency fund. It also has some of my personal savings (new to me car and travel fund), since it is currently paying better than the savings account I had opened for this purpose.

Primary Checkings - Bank of Little Rock
BOLR offers a 5.1% checking account up to $25,000 if certain requirements are met. This is where the balance of my paycheck is direct deposited. I also keep some of my emergency fund and some of my personal savings here so that I can earn as much interest as possible. As I approach the $25,000 limit, I transfer money out to maximize my interest earnings.

Personal Savings - Emigrant Direct
Emigrant is currently paying 2.75%. The remainder of my personal savings is here.

I also have a TD Ameritrade account which has part of my EF, which I am only using for the Suze Orman Save Yourself bonus. Once my bonus has been deposited, this account will be closed and the balance put into the Wamu savings.

So all that was the long way to say, yes, I have seperate institutions for checking and savings. It works very well for me and I don't find it confusing or difficult to track.

[normaldude]

I have my checking account at a local bank (Commerce Bank). Free checking, free bill pay, and the branches are open 7 days a week, nights & weekends. For my checking account, I want a physical bank near me, in case I need to walk in for things like certified checks (apartment hunting), or if I need a "briefcase full of cash" ASAP.

For savings, I use INGdirect.com and HSBCdirect.com. INGdirect is easier to setup and use, but HSBCdirect has slightly better rates. The brick & mortar banks around my area have terrible savings rates (around 0.5%). INGdirect and HSBCdirect have much better savings rates (3.0% - 3.5%), with no minimums, and no fees. The downside is that it takes 2-3 days to do the free transfers between the online bank accounts and my Commerce Bank checking account.

How does your credit union offer 5.09% interest on checking accounts? What's the catch? What's the name of the credit union?

[maat55]

Yes, many people do that.

But I have a stupid question... if the credit union is paying 5.09% on a checking account, why would you put money in a 3% savings account?

I was thinking the same thing. Why not open a checking account and not write any checks.

[skydivingchic]

How does your credit union offer 5.09% interest on checking accounts? What's the catch? What's the name of the credit union?

I don't know about the specific checking account that the OP is referring to, but a lot of banks and credit unions are starting to offer high yield checking accounts.

Here is a link to find these types of accounts.

Most have a limit to the balance they will pay the high interest rate on, usually $25,000. They also require a certain number of debit card transactions each cycle, usually 10 to 15. This guarantees them some income from the merchant fees charged on the transactions. Most also require electronic statements.

[david2045]

Thanks for the link. SKY

[feh]

My situation is similar to what others have posted. We have a couple of accounts at a local credit union (checking is really the only one we use), but our liquid savings are kept at an online bank, purely for the better interest rate.

[fruitbowlk]

I have my checking and savings account at separate banks and no it's not hard to keep track of them.

[Ima saver]

I keep my local savings, in a checking account that is paying 3.1% That is the highest rate around here. I put the balance of my savings into c.d.'s that pay 4% and up.

[MonkeyMama]

We've always kept most of our savings separate.

It's no biggie if you have an account that allows ACH transfers with no fees. We keep a small amount of savings (no more than $1k) in our CU's savings account earning piddly.

The rest we keep in 2 other banks. IT only takes a day or 2 to transfer money, I just do it all online. (Just be wary - some online banks are slow or charge transfer fees, etc.)

[EllaMinnowPee]

Thanks everyone, especially for the idea to have two accounts at the CU to get 5.09%, and use one as strictly a savings account. I think we're going to do that if we can.