Online savings and checking accounts are becoming increasingly popular as many primarily brick-and-mortar services become more readily available on the internet. The ease of access that web browsers and modern smartphone devices provide has further increased the popularity of online services. Whether you already have an online bank account or not, the following tips should be able to help you optimize your online checking and savings account experience.
TIP#1: Link your online checking and savings accounts
This goes almost without saying. If you have both a checking account and savings account online, there is little reason not to link them. Linking bank accounts makes it easy to transfer funds from one to the other, much easier than doing wire transfers, for example–which could also land you a fee. Many banks offering online savings accounts will ask if you want to link a checking account before you even finish the application process. Some checking accounts, like Chime’s and Simple’s, come with their own, integrated savings accounts. That way users don’t even need to go through the trouble of opening one themselves and then linking it.
TIP#2: Don’t obsess over APY
Imagine this: you are looking for an online savings account and find a bank offering one at a very generous rate of 2.00% Annual Percentage Yield (APY). You haven’t seen anything like it yet and jump at the chance to open it. To do so, however, you realize that a large initial deposit is required. Said deposit amount must also be maintained if you want to accrue interest at the advertised 2.00% APY–otherwise, the rate goes down to a crushingly low 0.25%. A long list of fees and restrictions also limit how freely you can use or move the funds already placed in the account.
Although this example is a little extreme–very few savings account start with a 2.00% Annual Percentage Yield rate–the point remains: APY isn’t everything when choosing an account. Instead of trying to find the online saving account with the highest APY, look for one that meets your specific banking needs. If an account features an APY of 1.55% and has features such as ATM availability, Federal Deposit Insurance Corporation membership, or a mobile app, you might want to opt for it over one that offers a higher 1.75% or 1.85% APY, but lacks the elements of the former. Ultimately, a mere .30% or .15% difference in APY rate shouldn’t be enough for you to give up the things that really matter to you when deciding on an online savings account.
Don’t obsess over the APY of online checking accounts, either. Like online savings, these tend to have substantially higher rates than their brick-and-mortar counterparts. Funds don’t stay in checking accounts for long, though, and will seldom generate enough profits through interest. Sometimes the best alternative is simply an account that provides the features and freedoms that you need instead of one that provides a minimal increase in profits through interest.
TIP#3: Take advantage of account benefits and bonuses or perks
Online checking and savings accounts come with a variety of benefits nowadays. These include free credit score reports, cash-back rewards, budgeting tools, and refunds on international ATM withdrawals. Those with mobile apps can be a huge asset, allowing you to deposit checks by taking a picture of them and to review your account activity and use. There are also banks, like Discover and Chase, that offer a sign-up or welcome bonus for their savings accounts where depositing a certain amount of funds before a specified date grants you a cash bonus. Some people open accounts with banks like these and aren’t even aware of these bonuses. Make sure to review any and all additional benefits a bank offers before opening an account with them so you can capitalize on them.
TIP#4: Open as many new accounts as you need–but don’t go overboard
If you’re reading this, you probably have a checking account already, online or not. It’s the bare minimum for anyone making transactions on a daily basis. Combining that checking account with a savings account is what most people usually recommend when asked how to allocate their money. So, if you have both types of account, why get any more?
For starters, there are must than just savings and checking accounts. Other types of account include money-market, retirement, brokerage, and certificate of deposit accounts (CDs). There are even separate kinds of savings and checking accounts. It’s always a good idea to explore the types of bank accounts available and understand which ones fit your goals the best.
The number of accounts you should open depends on what you want to achieve with your money–and how much micromanaging you are willing to do. If you are opening a checking account for your business or freelance work, for example, it might be worth keeping a personal checking account as well. The same goes for those opening a joint account with a partner or spouse. Savings accounts are similar in that a single one is usually enough to cover any saving goals a person might have. However, because they impose fewer fees on average, they are also easy to open many of. Some people decide to keep separate savings accounts for each goal, be it trips, college, or emergency expenses.
Do keep in mind that choosing banks carefully and distributing your funds wisely is essential if you are going to have more than the basic checking and savings combination. Opening more accounts than you can handle is an easy way to lose money and become untrustworthy in the eyes of banking institutions. For checking accounts, open new ones only when you feel that keeping your personal account is still necessary. For savings and other types of accounts, make sure to budget your income adequately so primary expenses are still paid for.
TIP#5: Keep an eye on your balance statements and account usage
The last thing you want is to get a call from your bank saying that the funds in your accounts have seen irregular or even illegal use. While online banks typically employ very powerful safety measures to protect their accounts, it’s still within the realm of possibility that someone may access them and use your money. To avoid this from happening, you need to give a hand too in protecting your account. If using the bank’s mobile app, make sure to know where your phone is at all times and that it is physically secure. Don’t let your app “remember” your log-in information. Select a unique, hard-to-guess PIN. Also, review your monthly statements to make sure everything is in order and set up alerts so you can be notified in case of strange activity or an emergency.
TIP#6: Decide where your paychecks are going
While it is common practice for people to deposit their paychecks directly to checking, then transfer an amount from it to their savings account, take a moment to consider the alternative. Those living from paycheck to paycheck don’t have left much room for savings, but if you do happen to have a clear budget you know you can abide by, depositing your paychecks into a savings account could be a better choice. The idea is to deposit the check, then make a transfer into your checking account with the amount you expect to need for basic expenses, transportation, food, and so on. In addition, there is also the choice of having an amount of each paycheck be deposited into both savings a and checking accounts directly. If you work for a company or business, ask your employer and see if they are willing to do so.