Online savings accounts vs. traditional banks

[Zwylde 819]

Anyone moved any small liquid savings into Ally or Marcus type platforms that are offering up to 2.5% interest on savings accounts versus the traditional banks giving practically nothing?  

Pro's Con's?

 

 

[52-80 19,291]

pretty sure those higher yield savings have restrictive withdrawal policies like X amount of times per year

[BurdineBandit 820]

I have an online Barclays account and it's the same regulations as my Wells Fargo Savings (tied to my checking), 6 transactions (withdrawals) per month max before fees hit.

Only con is it takes 2-3 business days to get to me if I transfer to my checking.

Edited January 28, 2019 by BurdineBandit
withdrawal, obvs.

[RDCanecutter 26,571]

If the question is [fill in the blank] vs traditional banks, I'm going with [fill in the blank].

Keeping a traditional bank account is like taking care of an animal that bites you.

[Nice Guy Eddie 13,569]

10 minutes ago, 52-80 said:

pretty sure those higher yield savings have restrictive withdrawal policies like X amount of times per year

usually about 5-6 withdrawals per month and then there is a transaction fee for each.  Basically don't use these for money you need for regular transactions but your money is never locked up.

Personally I like to keep money for basic, relatively common needs in my Chase checking account.   As a matter of fact, I probably have too much in there right now.  Time for a transfer.   I attempt to put emergency savings in 5 year laddered CDs to optimize the interest rate.   Right now >3% is average.

Edited January 28, 2019 by Nice Guy Eddie

[JimmyHoffa 1,188]

21 minutes ago, Nice Guy Eddie said:

usually about 5-6 withdrawals per month and then there is a transaction fee for each.  Basically don't use these for money you need for regular transactions but your money is never locked up.

Personally I like to keep money for basic, relatively common needs in my Chase checking account.   As a matter of fact, I probably have too much in there right now.  Time for a transfer.   I attempt to put emergency savings in 5 year laddered CDs to optimize the interest rate.   Right now >3% is average.

 

Limited withdrawals and 2 to 3 business days to process- Yes

Transaction fees- No.

It's not the be all end all but it's where I keep our emergency savings and I'll take 2%-2.5% vs. 0.25% in traditional banks all day and everyday. 

[Horns99 171]

Ok, so who are some of them with the best rates out there currently?


Sent from my iPhone using Tapatalk

[Guest Lobo]

Rate shopping has become the new health insurance premium racket.  I entice you with an extra 15bps just like I drew a consumer in with 20% off on insurance premiums.  However, I screwed them on deductible, co-pay, out of pocket maximum and out-of-network restrictions much in the way I can restrict the way a consumer can access their money.  

Those online banks are just a trend.  People want to know their banker.  They want to be able to see that they are paying 50bps more in loan rates so their banker can have a nice building that the customer can access 1-2x/year.  They want a banker that knows their kids birthdates that sends them a notice when auto loan rates coincide with those new Buick or Chrysler models.  The public wants to bring the family in on a Saturday morning to meet the banker and introduce their children to the world of finance.  The consumer wants a teller who remembers their name and can pass them off to an expert in the area the consumer needs help with in a building of 5,000 square feet.  The 6 teller lanes and 37 parking spaces at your local branch, they aren't there to make sure your banker is wasting your money on needless CBD real estate; they are there because demand for the intimate banking experience is strong and getting stronger each day.  

[TwiceHorn 31,707]

47 minutes ago, Lobo said:

Rate shopping has become the new health insurance premium racket.  I entice you with an extra 15bps just like I drew a consumer in with 20% off on insurance premiums.  However, I screwed them on deductible, co-pay, out of pocket maximum and out-of-network restrictions much in the way I can restrict the way a consumer can access their money.  

Those online banks are just a trend.  People want to know their banker.  They want to be able to see that they are paying 50bps more in loan rates so their banker can have a nice building that the customer can access 1-2x/year.  They want a banker that knows their kids birthdates that sends them a notice when auto loan rates coincide with those new Buick or Chrysler models.  The public wants to bring the family in on a Saturday morning to meet the banker and introduce their children to the world of finance.  The consumer wants a teller who remembers their name and can pass them off to an expert in the area the consumer needs help with in a building of 5,000 square feet.  The 6 teller lanes and 37 parking spaces at your local branch, they aren't there to make sure your banker is wasting your money on needless CBD real estate; they are there because demand for the intimate banking experience is strong and getting stronger each day.  

Well, except that in the case of a savings account, it's not that complicated by far.  You got interest rates and when will they change, withdrawal restrictions (that aren't unique to online), and transfer to checking time (which also isn't unique to online).

I see no drawbacks to rate shopping for a savings account for short-to-medium term savings.  Checking accounts are another matter.

And unless one has a business-borrowing relationship with a bank (non-mortgage loan or line of credit), I don't know anyone anymore who wants or expects a personal relationship with a banker.

[Nice Guy Eddie 13,569]

People want to know their banker?  I guess if you’re borrowing frequently or late on payments, then a personal relationship matters.  Otherwise I think of a brick and mortar location as where I use the ATM.   

I admittedly chase higher interest rates on savings but I’ve also been with Bank One and now Chase for 30 years. But I don’t know one Chase employee by name or by sight.   

Love their credit card rewards. Provided me many free flights over the past 5 years. 

Edited January 29, 2019 by Nice Guy Eddie

[LebongJames 1,827]

We’ve had a Barclays online account for years now. It’s true it takes 2-3 days but the 6 withdrawals is not an issue for us we never really take out small amounts.

We have never paid a fee since opening the account.

I think we are up to 2.35%, beats the hell out of our .25 from USAA. Haven’t been into a brick and mortar bank in 5-7 years.

[Telegraph_it 3,374]

I invested the entirety of my savings. Dividend income is way better. X amount is mostly in bonds and then I go progressively more aggressive until it’s 100% stock. Has worked well since 2012. Talk to me again when another 08 happens. 

I keep enough in cash to pay mortgage and credit cards for a few months. 

[gmr548 16,647]

2 hours ago, TwiceHorn said:

Well, except that in the case of a savings account, it's not that complicated by far.  You got interest rates and when will they change, withdrawal restrictions (that aren't unique to online), and transfer to checking time (which also isn't unique to online).

I see no drawbacks to rate shopping for a savings account for short-to-medium term savings.  Checking accounts are another matter.

And unless one has a business-borrowing relationship with a bank (non-mortgage loan or line of credit), I don't know anyone anymore who wants or expects a personal relationship with a banker.

I think your sarcasm meter is broken.

[gmr548 16,647]

Also, I have a Barclays account and have no complaints. I don't know if they still are, but when I signed up they were among the best rates. They have been steadily increasing them and have remained competitive - 2.2 percent now. Six withdrawals a month is a fuckload for a savings account. It does take a couple of business days to get money to your checking account, but overall it seems to be as good a place as anywhere to park your emergency fund.

[RPM 26,435]

I've had an account at my little hometown bank since before they had account numbers and used counter checks. I knew everyone that worked there and the President was my loan officer. Now almost everyone I knew there has retired and I'm just another schmuck. 45 fuckin years of spotless credit and multiple loans, I have 0 seniority and get treated as such. Toss in low interest/high fees and I'm ready to cut and run. Was looking last week at who had the best savings/money market rates. Found several above 2.4% apy but the names didn't inspire much confidence like Memory Bank.

Edited January 29, 2019 by RPM

[Quagmire 2,147]

Used discover bank for a few years now , they are up to 2.2%

[Nice Guy Eddie 13,569]

5 hours ago, RPM said:

I've had an account at my little hometown bank since before they had account numbers and used counter checks. I knew everyone that worked there and the President was my loan officer. Now almost everyone I knew there has retired and I'm just another schmuck. 45 fuckin years of spotless credit and multiple loans, I have 0 seniority and get treated as such. Toss in low interest/high fees and I'm ready to cut and run. Was looking last week at who had the best savings/money market rates. Found several above 2.4% apy but the names didn't inspire much confidence like Memory Bank.

I hear ya.  While I have moved money around to get better rates, I stick to more well known online banks even if I lose up to .2%.    Ally, discover, Barclays, penfed, etc.

for the comment about putting all savings in stocks or bonds, I see nothing wrong with those investments but I don’t think they’re the right place for emergency savings.  I try to keep 9 months of expenses sitting in high yield savings accounts.  Sure I lost out on potential profits over the past decade but those funds aren’t about that.  I have other investments for that. 

[Okie State 3,868]

Used discover bank for a few years now , they are up to 2.2%

This. Simple, no fees, easy transfers. I also had an Amex account in the past that was the same, but I didn't really need both and closed it. I use it for short-term emergency cash.

[Pogo 284]

We have had an Ally account for several years and have never paid a transaction fee.  We only make a few per month at most though.

[HRSchenker 2,293]

Ally is a great bank. I've used them for the last 5 years with absolutely zero complaints. One thing I really like about them is that they have a security procedure I've never seen at any other bank. They give you the option to create your own security question and answer. None of this "mothers maiden name" or "childhood pet" stuff. You can literally have them ask you any question you want. For the longest time my security question was "What year was your mother born?" and my answer was "None of your goddamn business". Unless you saw me type that in or they had a data breach, that's almost a bulletproof security feature.

Now back to the bank itself. I have their online money market account with 2.20% interest and I am limited to 6 transactions every billing cycle. If I go over 6 then I have to pay $10 per transaction AND if I do that on a regular basis then Ally is supposed to close my account. Honestly you should probably look into putting your money in the Vanguard Prime Money Market fund. Last I checked it was at 2.52%. That's better than Ally's money market fund and a hell of a lot better than what a regular bank is going to pay you.