Q&A: Choosing the right bank accounts
In this episode, co-hosts Cassidy and Emily give their top banking tips to help you maximize your savings and choose the right bank accounts. They discuss how many accounts you need, the benefits of high-yield savings accounts, and how to avoid fees and find good customer service. Learn the pros and cons of local credit unions versus online banks, and get practical advice on managing cash deposits and online banking. With personal stories and actionable tips, you'll be equipped to make smart banking choices and optimize your finances.
00:00 - Welcome to the Finance Q&A
01:14 - How many bank accounts do you need?
08:17 - What are the top three things I should look for in a new bank?
18:53 - Do you need a local bank?
27:59 - How do I choose the “best” HYSA when rates change so much?
32:53 - How can I make sure I can access my money in an HYSA with no ATM access or debit card?
37:46 - Is it worth switching banks for a bonus?
41:57 - How much we've earned with our high-yield savings accounts
Transcript
[00:00:00]
Cassidy: Hello. Hello. And welcome to a Q&A episode with the Finance Girlies themselves. So in [00:01:00] this episode, we have received a lot of questions about bank accounts in particular. So we have, let's see, roughly 1, 2, 3, 4, 5, 6 questions on our list. We're just going to go through them and share our thoughts.
So the very first question on our list is, how many bank accounts do I need? Emily, do you want to start us off?
Emily: Sure. The short answer is, it depends, but I think you and I have slightly different approaches, so we can each share what we do and why, because there is no single right answer to this question. But I guess, bare bones, you need at least a checking and a savings account. And when I say savings account, I mean a high yield savings account, so you can be earning significant interest on your balance. But back to my accounts. I like having a high yield savings account. And then I also have a savings account at my local credit [00:02:00] union where I have my checking account.
Cassidy: So just to clarify, when you say that you have a high yield savings account, you mean like with an online bank that doesn't have any physical locations, which is why you also have…
Emily: Yes, so I have a checking and savings account at my local credit union. I've had those accounts since I was like, I don't know, a kid, 15 maybe. Then I opened up a high yield savings account with an online bank that was offering really good rates and still offers really good rates. And then since getting married my husband and I do, kind of, the yours, mine, and ours style of banking.
So we each have our own individual accounts that we… honestly, I don't use very much, but we just have our own that we've always had. And then we have joint checking and savings and this online savings account is a joint account as well.
Cassidy: So how do you differentiate between what goes into your high yield savings account versus what you keep in your savings account at the credit union? [00:03:00]
Emily: At the credit union, honestly, I just keep the minimum in there to, you know, the required minimum balance.
Cassidy: That's right. Okay. Yeah. Cause for most credit unions, you're required to have a savings account to even like, use them as a service. Okay. That makes sense.
Emily: Yeah, I think, I really do like having an option to bank in person, even though I don't use it often. Just my, like, personal preference, I like to be able to, like, literally walk into the bank and, like, deposit cash if I have that for some reason.
So I do like having the local option, but I definitely — the high yield savings account, like wherever you can get the best account that's accessible and convenient for you — you might not find that at your local bank or credit union.
Cassidy: Yeah. So it sounds like no matter what you have, a checking and a savings account, like those are non-negotiables. Ideally, the savings account should be a high yield savings account, which we will talk about what that is [00:04:00] specifically. But then for personal reasons, you just like having a physical bank close by in case you need it, which is why you're, you're still with the credit union.
Emily: Right. Yeah. I guess I will add that part of the reason I also have been using this credit union for years and years is, I also just really like what they offer. Like my checking account actually is a high yield checking account too. So I earn interest on that as well. But I think if I wasn't happy with the account, I would definitely look elsewhere.
Cassidy: Yeah, and I think too with credit unions, like, they're usually focused on giving back to the community, they're not for profit. So it's like, if it's something you feel really good about, it's like, why get rid of it, even if, you know, there are better options out there.
Emily: Yeah. Definitely. So, what do you do now?
Cassidy: Same as Emily, I'm a firm believer that like, simple is best. You need at least one checking account and one savings account, but like other than that, you really don't need to stray too far outside of [00:05:00] that. Of course your checking account is for your spending money, right?
It's for bills and receiving your paychecks from your employer and using your debit card and writing checks — that is what your checking account is for. It's for, like, your day-to-day finances. And then your savings account is for any money that you don't need right away. Even if it's just $50 that you might need next month.
I personally just have one checking account and one high yield savings account and that's it. Just those two bank accounts on the personal side of things. I am also a freelance writer, so I own my own business, and so I also have a business checking account, but that is like a necessity for me to be self-employed. So like, that's a completely separate thing.
But on the personal side of things, I only have one account of each because honestly, the thought of having like, multiple checking accounts floating out there and multiple savings accounts floating out there just sounds really, really [00:06:00] stressful. And I have both of those accounts with the same bank because I only have one login and one app to manage and all of those things.
So for me personally, like, I just wanted to keep things really simple. So that is the route that I have taken with my bank account situation. You will hear some people recommend, sometimes it can be good to have multiple savings accounts based on your goals. So you have, like, one savings account for your emergency fund and you have one savings account for vacations and, you know, maybe one savings account for this house you want to buy in the future.
And if that sounds exciting for you, you're like, “Oh yeah, I would love to divide my goals up like that,” then maybe multiple savings accounts does work for you. It's completely like a personal thing. But for me just the one savings account has always made sense.
I bank with Ally Bank, in particular. And I have banked with Ally since 2012, I believe. And one cool thing about their — I think you can do it with their checking and savings account — [00:07:00] but it rolled out to the savings account first where you can divide your money up into buckets.
So it kind of it's the same theory of, like, opening up multiple accounts so you can divide your money up for separate goals, except with Ally Bank in particular, you can divide your money up, but it's still inside one account. So you have that differentiation, but you only have one account to manage.
Which is really cool. So I, I do that with my money if I want it to be distinct as to like what I'm saving for specifically, but yeah, that's it.
Emily: Mm hmm. Yeah, I agree with you about having one primary savings account is just so much easier than having different savings accounts for each goal. I think it's much easier to track different goals, either like what you do with the savings buckets. My bank doesn't offer that, but just in a budget. I mean, I essentially divided up in a budget anyway, so keeping it all in one account is just so much easier.
Cassidy: Yeah, I agree. You and I use the same budgeting platform, I know — You Need A [00:08:00] Budget — and I do really like that because you just, you divide your money up in categories there and so it almost doesn't matter how many bank accounts you have because it's like more, more granular in there. Very cool. All right.
Question number two, what are the top three things I should look for when looking for a new bank.
Emily: Well I think the first thing you should look for, if you're shopping for a savings account in particular, is a high interest rate. So, high yield savings accounts, which we've been mentioning, just earn so much more interest than a traditional bank account does. And there's no reason you shouldn't be earning interest on your savings if it's just sitting there, it's, it's essentially just free money for letting your money just sit there in the bank.
So you definitely want to make the most of that by finding a bank that offers high interest rates. So that's, that's probably [00:09:00] for me the most important thing. What about you?
Cassidy: Yeah so for context, the FDIC, which is the Federal Deposit Insurance Corporation. Is that what it stands for?
Emily: Mm hmm.
Cassidy: Okay. The FDIC releases like national average rates for checking account, savings accounts, CDs, all of those kinds of things. Those are published rates you can see online.
Currently, the average savings account earns 0.46% interest. Which would be like you putting $100 in a savings account, leaving it there for an entire year, and it earns 46 cents. But truth be told, that is actually a much higher interest rate than you typically earn on savings accounts from the four or five largest banks in the United States.
So the four largest banks in the US are, in no particular order, Chase, Wells Fargo, Citi, Bank of America. A lot of those bank accounts earn 0.01% interest or 0.1% [00:10:00] interest, which is the equivalent of parking $100 in a savings account and earning one penny, or one dime on your savings over the course of that year.
It is honestly an insult to earn that little interest on a savings account. So whenever Emily and I talk about like, check your rates, look for a high yield savings account, these are accounts that traditionally earn anywhere from like five times to 10 times more than the national average. So if the national average is currently 0.46%, this means that some of these accounts are earning 4.6%, which is the equivalent of parking a hundred dollars for a year and earning $4 and 60 cents, which honestly doesn't sound like that much more money. But say you have a $10,000 emergency fund in a high yield savings account, that's like earning $460 a year. Versus $46 a year on average. So as your savings grows, these numbers [00:11:00] begin to have more of an impact. So that's specifically what we mean when we say high yield savings.
Emily: Yeah. The next, or one of, one of the top three things you should be looking for when comparing different banks is you should look for accounts that don't charge fees, or accounts that have fees that you can easily meet those minimum requirements in order to waive the fees.
So a lot of times those requirements will be like, you must maintain, you know, $500 in your savings account to avoid monthly fees or, or something like that. But there are a lot of accounts these days, I think, especially with online banks that don't have the overhead costs of maintaining branches, that are able to offer accounts with no fees at all.
So that's definitely something you want to look for because again, it's, it's like the traditional savings accounts. There's no point in earning a penny when you could earn 10 times that. And there's no point in paying fees [00:12:00] when there are plenty of options out there of banks that won't charge them.
Cassidy: Yeah, so true. That was another factor that I had on my list too, was to look at fees because whoever is listening to this right now, I even pose this question back on you, like, do you know if you are paying a monthly service fee for your checking or savings account right now? I have asked this question to a lot of people, and a lot of times the answer is, I don't know, like, I've never really reviewed my bank statement in that much detail to see if they're charging me a fee every month or not.
If they are charging you a fee, you do not have to be paying it because there are so many other banks out there these days that do not charge a monthly fee at all. And in my personal/professional opinion and experience no one should be paying a monthly service fee for their checking and savings account in this day and age.
If your bank is still charging you a fee, It's very archaic, and I would encourage you to look for a new bank or see if there is an easy way for you to avoid that fee because it's such an [00:13:00] easy thing to avoid these days.
Emily: Yeah, I mean, if you think of, like, I don't know, a $10 monthly fee, I mean, it's not like a crazy amount of money, but when you think of your savings account and, like, the interest you're earning each month, It just takes a huge chunk out of that interest, especially, I think often the banks that are charging the fees are also the banks that are paying pennies in interest. So you might be losing money when instead you could be earning money.
Cassidy: Is that not wild to think about? That the banks that pay you the least amount on your savings are also charging you the most fees on like your checking and savings accounts too?
Emily: Yeah.
Cassidy: Ah! And the truth of the matter is, if you peek under the hood, a lot of times it's because, these banks have so much overhead they need to cover.
They have thousands of branch locations, hundreds of thousands of employees. They, they have a lot of bills to pay. So they're having to charge you a lot and pay you a little to make sure that they're still profitable at the end of the day. But that really is the cool thing about online [00:14:00] banks is that they don't have all of the physical branch locations.
A lot of them do have 24/7 customer service, like U.S.-based customer support, because they do realize that you need a good customer experience. But they're just able to be so much better because they have fewer costs.
Emily: And that brings me to my final point, which I think was actually the same as yours. That third thing you want to be looking for when looking for a new bank is, in my opinion and Cassidy's as well, is just good customer service. Yeah, I just, if I'm going to be depositing my hard earned money into a financial institution, I just want to know that like, I can get somebody on the phone and have a conversation where they are able to answer my questions and get back to me in a timely manner, and I just feel comfortable trusting, you know, this bank with my money. And I mean, most importantly, that I can [00:15:00] get my questions answered. And I yeah, I just feel comfortable banking there. I think that to me is more important than maybe having a really, I don't know, high tech mobile app or budgeting software or anything like that.
I would just rather have kind of that trust in my bank and be able to talk to somebody when I need to.
Cassidy: Yeah, and you touch on a very important thing. I think first of all, the data is out there. Very few people ever change banks. Like, usually whoever you end up banking with, whenever you are a young adult is like the bank that you end up sticking with, because the whole process of changing banks feels really scary.
But I think if you bank with a traditional institution like a Chase or a Bank of America or a Wells Fargo, the thought of switching to an online bank that doesn't have physical locations for you to like, meet someone face-to-face and talk to them about whatever issue you're having, if it comes to that, the thought of not having that at all sounds really scary. [00:16:00]
And I think that can hold a lot of people back, so you're like, well, if I'm banking with a place that doesn't even have physical locations, like, how am I going to get help when I need it? And I think that is why choosing an institution with really good customer service is one of the most important things.
I usually encourage people to actually call customer service, even if you don't bank with them yet. Just think of a random question like you and I have to do this all the time in our jobs. Whenever we're writing about bank accounts, I cannot tell you how many, like at least 100 times probably over the years I have called customer service and been like, I'm thinking about opening a checking account.
I was just wondering what are the ways that I can withdraw my money? I don't know, just like really silly questions or like, I'm thinking about getting a mortgage. And meanwhile, me in real life, I have no intentions of ever doing those things.
But a lot of times we have to do that for our work because we need information about a company that we can't find online.
But also it's just really good to test customer service. Like how [00:17:00] quickly did they answer? How thoroughly did they answer your questions?
How helpful were they? Did you feel seen and heard and supported? What were their hours? All of these things are so important. And I will preface this by saying that there are a lot, there are a lot of really great banks out there with really great customer service.
But one reason why I recommend like Ally Bank to so many friends and family members is because I have never not had a good customer experience with them. Like, they're always available, they're always so nice, and so helpful, and it's always been such a good experience, and every single time I get off the phone with them, or off of a chat with them, I'm like, dang, I really chose right.
Like, that's how I feel afterward, and I'm just imagining if I didn't have that good of an experience, I would be like, I need to get out of here as quickly as I can, despite the good interest rates and the no fees or whatever.
Like customer service really can shape your experience.
Emily: I agree. And [00:18:00] I've had the same experience with both my local credit union and Discover’s, where I have my high yield savings account, and great, great customer service makes all the difference.
Cassidy: Yeah, that's cool. I did not know that you had your high yield savings account with Discover.
Emily: I do. Been very happy.
Cassidy: That is really cool. Yeah, I only have a Discover credit card, but I feel like no matter what I'm writing about for work, whether it's like the best personal loans or the best credit cards or the best checking account or the best high yield savings accounts, Discover is always on every single one of those lists.
It just, it seems like they're really doing a lot of things right for their customers. Yeah.
Emily: Yeah. But as a customer, that's been my experience, so I can, I can vouch for that.
Cassidy: I love that. All right, this leads us to our next question. Is there any reason I need a local brick-and-mortar bank? We've already alluded [00:19:00] to this, but what is your personal tank?
Emily: Do I think you need one? No, but as somebody who has one, I guess I have reasons for that being my preference. So, the reason I say you don't need one is because even if you bank online, there are ways you can deposit and withdraw cash. It's not really an issue if you're not, especially if you're not dealing with cash often, I think, maybe if you are, that might get to be a bit of a hassle, but we can talk more about that later, especially you, Cassidy, since I know you don't bank locally. But yeah, I do like having a local bank. There are a lot of perks to using credit unions, but one of those is when you're a customer there, you tend to, well, you're actually a member. So when you join a credit union, you open what's called a share account and deposit, usually it's like $5 to become a member of that credit union. And you do [00:20:00] typically have to meet some eligibility requirements first. But anyway, when you join a credit union, you become a member and also an owner, like a co-owner of the credit union. And it comes with a lot of perks. Credit unions are super member-focused. So like if you, I don't know, are with them for a certain number of years, you might start qualifying for relationship benefits and all these different perks and things like that. So I kind of like that. I mean, I've, I've been a happy customer with this credit union since I was a kid and just had my, you know, my very first savings account. But knowing I can go there, you know, if I ever want to get a mortgage, like I, I have those options with that local bank where I know I could, I could get competitive rates because I'm a member and because credit unions generally [00:21:00] offer lower rates on things like that.
So I just kind of like having that local relationship for day-to-day use, but also just for these other financial services that, you know, someday I might want to take advantage of.
Cassidy: Yeah, this is a slight side tangent, but I have been writing a lot about personal loans lately and like really diving into which lenders have the best rates and stuff like that. And one unique thing about credit unions, especially federal credit unions, is that for personal loans and like other lower stakes loans like that, a lot of times the maximum APR, like the maximum interest rate, they can charge you on a loan is 18% because they're governed by the NCUA. And so like if you have maybe not like perfect credit, right? Like you have credit that doesn't qualify you for the lowest rates, maybe you're gonna get a rate that's on the higher end. A lot of these just like regular lenders can charge sometimes up to like 36% [00:22:00] interest, which is more than a credit card, on something like a personal loan. But for credit unions, the max is 18%, which is like half of that amount.
So I don't know, I just, I remember learning about that and being so mind blown that their like maximum interest rates on a lot of things is so much lower than the maximum interest rates you'll find in other places, which can also be helpful, like if you are looking to consolidate high interest debt or looking to take out a low-ish interest rate loan for something like home improvements or medical expenses or, I don't know, anything like that. It just, it feels less predatory.
Emily: Definitely.
Cassidy: With a credit union.
Emily: And real quick, before you share your thoughts here, just to clarify, like, if I didn't have this great local banking experience, I, I think I would have probably moved on and closed that account. It's not worth, in my opinion, it's not worth paying fees and, like, earning pennies, just to have like that local bank. I think you can still shop around and find, whether it be a bank or credit [00:23:00] union, that treats you well as a customer. I think that's still super important if you do choose to bank with a brick-and-mortar bank.
Cassidy: Yeah, I think that's a really great thing to add, just knowing if in your gut you know that an online bank isn't for you, there are still, like, very high quality physical banks and credit unions out there. You can still have a really pleasant experience with them, even if you're not, not willing to go fully online.
Emily: Definitely.
Cassidy: Yeah, to echo what Emily said, I agree, like really one of the main reasons to still use like a local brick-and-mortar bank knowing that they charge higher fees and pay lower savings account interest rates is if you're depositing a lot of cash. In my experience, it's like one of the primary reasons, unless there is a secondary reason, like Emily pointed out, like they, this bank has all of these other services that you need to use in the future or want to use in the, in the future.
So you just want to start nurturing that [00:24:00] relationship now. But even if you choose to bank fully online, which is what I do, I do not have a single bank account with a brick-and-mortar physical institution, even for my business, like I use an online bank for my business checking account. And I will say that depositing cash is harder if you have cash, but it's not impossible.
So to speak from my experience, really, the only time that I have cash is like, if a family member has given me money for, like, Christmas or my birthday and they didn't write a check for some reason. I feel like I rarely ever have cash. So a lot of times these days, like, if I just have cash, I'll just keep it and, like, use it eventually because it is, you know, sometimes it's nice to have at least $20 in your wallet just in case you happen to run on, like, a cash only place or you're at a cool flea market or whatever.
But even with online banks, there are ways to deposit cash into your account. A lot of times, like some ATMs will accept cash deposits, you can also [00:25:00] get a money order, like buy a money order, make it payable to yourself, and then just remote deposit it, like you would any other check that you receive, like through your mobile banking app.
So there are ways around it, if you only want to go online and still have cash, but if you, I don't know, run a business that predominantly receives cash or for some reason, like you just always are needing to deposit cash, that could be one reason where I'm like, maybe it is better to have a physical location you can just pop into and deposit it really quickly instead of having to do like all of these back workaround methods, I guess.
Emily: Yeah. When I lived in Wyoming, I still had my Michigan credit union. Obviously there were no branches out there. Which worked fine for the most part. I had like ATM reimbursements, all of that. But I did a lot of babysitting at that time in my life, right after college, and got paid often in cash. And so I ended up actually opening a local bank account because I was getting so much cash [00:26:00] and there was not really another way for me to deposit it.
So I did open up a bank account and then I just closed it when I moved. So yeah, sometimes the need arises.
Cassidy: Yeah, that's a good point too. Like you can open one if you're just like temporarily in a position, you know…
Emily: Yeah, I think I had it open for like, three years or something and closing a bank account is not as scary as it sounds.
Cassidy: No, it's really not. And it's not like, it's not like closing out a credit card or something where it affects your credit score, you know, because your, your history plays a role and stuff. Like, a bank account is just a bank account. Like you, you can just close it and it's fine. It will have no effect on your credit score.
You brought up another thought for me as you were talking. I opened my online bank accounts when I was in college. I was still an undergrad. So a lot of times for the holidays, like I was still in a point in my life where I was, I would like receive [00:27:00] money for my birthday quite frequently. I would receive money from holidays, from like, my parents, but then also maybe aunts and uncles, maybe a grandparent.
And that was the, those were like the only times of the year where I would be really stressed about only having an online bank. But a lot of times then I would just wait until the holidays were over and I'd like collected cash from however many people were going to give me cash and then I would just go to my mom and I would be like, here is $200, will you please write me a check? And that would be my workaround and I did that for years. And as I've gotten older, that money comes less frequently, and I no longer live near family, so if I am getting Christmas money from someone, it's usually just a check, so it works out, but yeah, you can always also just go to someone you trust and be like, can I give you this cash and you write me a check for it?
Emily: That's a good idea.
Cassidy: Yay. All right. Next question. How [00:28:00] do I choose, and I'm doing air quotes here, the best high yield savings account when rates change so much?
Emily: Good question. First of all, I don't think I would be super worried about choosing the best high yield savings account. Just choosing a high yield savings account that checks all your boxes of high rates, not charging fees, and having good customer service, like you're going to be fine. But it's true. So savings accounts interest rates can change at any time. They're not fixed like they would be on like a personal loan or something like that. So they can, and they do change, they can go up or down. But generally if a high yield savings account is offering like a really competitive rate, they're probably always going to be offering a decently competitive rate. And they may not always have the best rate out there, but in general, you can be pretty confident that they're going to offer you a good rate.
So what I like to do if I'm [00:29:00] ever researching new bank accounts or I mean, I did this somewhat recently with actually a business savings account.
I just will Google, you know, the best high yield savings accounts, best business, high yield savings accounts, whatever. And just like click on a few articles like Bankrate, NerdWallet, Forbes Advisor, and just kind of browse their lists. There's a lot of research that goes into making those lists, and they break down these accounts, not only by interest rate, but they'll tell you all that other information you need to know. And if you start to see the same accounts, on multiple lists you can be pretty confident that you're gonna get, you know, that it's a good account and you're gonna get a decent rate.
Cassidy: Yeah. It's like, look for the common denominator. Like which of these banks are you seeing on every single like best high yield savings account list.
Emily: Right. And like, I think, the key is to not overthink it. Like opening a high yield savings account today is better than researching for a year and not opening one until next year.
You don't need to find like, the best. [00:30:00]
Cassidy: Yes. And you are speaking to people like me because I am a person who will research and research and research and be like, there's probably one right answer or best answer out there, and I cannot take action until I find that one or right or best answer, which is exhausting. But yeah, to echo your thoughts, like there is no bank account or bank that's like absolutely the best.
That's why all of these best lists exist. Because so many banks are good for different things. Like, right? Even if you're presented with five high yield savings accounts that all seem good, when one bank may also be like really, really great at customer service, another bank may only offer savings accounts and not have checking accounts.
So if you're the type of person that wants to only use one bank, like maybe they're ruled out, even though they offer really great rates and have really low fees, like there's so many other factors that go into it. So like you said, I think the best thing to do is to look [00:31:00] at the bigger picture and be like, okay, does this bank charge good rates? Do they charge low fees? Okay. Do they have good customer service? Do they have, insert any other features that are important to you? Yes, yes, yes, yes, yes. Okay, this looks like a good option for me and go from there and to really not overthink it. Just look for a bank that checks all of your boxes. That being said, as we said earlier, you can just look at whatever the national average is, like you can just Google “FDIC national average for savings accounts” and it'll tell you whatever the average is.
And if you find a bank that's charging five or 10 times that amount in interest, then it's a high, it's a high yield savings account. And I think you'll be fine. But yeah, you also brought up another good point that the interest rates on high yield savings accounts can change at any point in time. They're not locked in a lot of times. So if you see headlines like the Federal Reserve has cut interest rates, that means interest rates are dropping which is both good and bad. [00:32:00] It's really good if you're looking to borrow money because if rates are lower than you get to borrow money for less interest, but if you're saving money and rates drop, then that's bad because you're going to earn, or you're going to earn less interest on the money you're saving.
Same when rates rise, like, we are coming out of a high rate environment, still in a high rate environment. It's great if you're saving money. Like, you are just raking in that dough. But, if you're looking to borrow money, if you want to buy a house, for your credit cards, your personal ones, whatever, rates are, like, historically really high.
So yeah, as the Fed continues to adjust rates, like I think in September, the Fed just cut rates again. So, interest rates, even for high yield accounts, may drop a little bit. But it's normal. You just want rates that are competitive for the time. Whatever rates are like currently.
Emily: Right, yeah.
Cassidy: Okay, next question. How can I make sure I can access my money in a high yield savings account with no ATM access [00:33:00] or debit card? For some context, I believe the person who asked this question is recognizing that a lot of times when you open a high yield savings account specifically with an online bank, sometimes the only way to access your money is to transfer it to another account, like you can do online transfers, but you don't get any type of card to withdraw cash or anything like that. So Emily, do you have thoughts?
Emily: Yeah. Good, good context. So I guess, speaking from personal experience, like, I have my high yield savings account at an online bank, and I don't have a checking account there. So that is one thing to consider if, you know, if this doesn't sound like it's feasible for you, then maybe consider an online bank that offers checking and savings. But sometimes a little bit of separation is good. You want your savings to sit there until you really need it. So not being able to access it right away is, you know, can kind of potentially be a good thing. So yeah, if I need to access money in my high yield savings [00:34:00] account, all I do is just initiate an automatic transfer to my checking account. And it's super easy to do online. And money's usually there in my account within a couple of days. So, again, I, I'm not doing this all the time, like, the money in my high yield savings account is, you know, it's for emergencies, it's for future goals, it's for, you know, a new car, things like that, so I'm not constantly or even often drawing on it. But when I do need it, it's there for me to transfer. I will say I have been in a situation where I just, I didn't plan ahead very well, and I knew I would need money from that account, and I didn't transfer it in time. And so what I ended up doing actually was initiating a wire transfer. Which came with a small charge. I mean, a decent charge. It was like 30 bucks or something. But for that one instance, like [00:35:00] literally once in the years I've had this account, like to me it didn't feel like a big deal.
Cassidy: Yeah, do you mind giving a little context? What was going on?
Emily: Yeah, I was buying a car and it was, that's a whole story, but yeah, I had the money in my high yield savings account where I had been like saving up for it and yeah, I, I wasn't totally planning for like, the speed at which once I decided on a car, I, you know, in order to, leave the lot with the car within the week, I needed to get that money pretty quick. So, yeah, that, that little $30 wire fee did not feel like a big deal in that moment.
Cassidy: Yeah, especially when you're buying a car.
Emily: Exactly. Like, I don't, it's, it's okay.
Cassidy: Yeah. So you bring up a good point about having your checking and savings account with the same place versus having them at separate institutions. There are a lot of benefits honestly to each because if you have them [00:36:00] at separate institutions there's this natural pause button that's created where like it takes more effort to transfer the money so you have more time to think about it and you're like, do I really need to transfer this?
Also, out of sight, out of mind, like you may not be as tempted to spend it on things that don't align with your goals if you're not seeing that money every single time you log in to check your checking account balance. So there are definitely pros. I do have my checking and savings account with the same bank, so transfers are instant.
Another benefit to if you ever overdraft on checking, a lot of times, it will just pull the money from your savings account to cover it.
And then you don't have to worry about overdraft fees and things like that. So there are some perks that come with that too. But because my bank accounts are with the same institution, I have never worried about, how can I get money out of my savings account if I need to? Because it's instant, right? Just move it to checking. And then I have all of the traditional methods I would have. I can write a check. I can go to the ATM and withdraw money. I can, what other options am I missing? There are definitely other [00:37:00] ways to use your money. All the things. But yeah, that's the biggest thing. I, I will say that some savings accounts do come with an ATM card. Like I know Syncrony Bank, if you have one of their high yield savings accounts, you can get an ATM card and it's not a debit card. So you can't make purchases with it, but you can use it at the ATM to withdraw cash if you need to. So most savings accounts. Especially online ones, transfers are like the, the best way to touch your money if you need to use it.
But if having some extra form of access is really important to you, you can look for a bank account that comes with an ATM card. Or like Emily said, you can also have like a backup account at a physical institution where you could just pop in.
Okay, very last question. Is it worth the hassle to change banks to get a new account bonus? And for reference, a lot of times if you're shopping around for a new bank account, banks will have advertisements, like a $200 cash bonus when you open this checking account and do [00:38:00] qualifying deposits within the timeframe.
So it's like, Ooh, I can get an extra $200 for free if I just open up this bank account and do whatever it needs me to do. So the question is, is this worth it? Sometimes? Never? What are your thoughts?
Emily: I've never done this.
Cassidy: Me neither.
Emily: I mean, I have, I will say I have paid close attention to bonuses when opening credit cards. I think that's kind of a different story which maybe we can talk about another day. But my opinion is, like, what we talked about at the top of the episode, like, the most important things when looking for a bank account are your rate, fees, and customer service.
And like, a bonus might just be a cherry on top, but it's not worth paying fees, bad customer service, any of that. I think when looking for a bank account, start with those three things. If you happen to find [00:39:00] multiple options you're comparing and maybe one of those banks offers a bonus, like that's great and might as well take advantage of it, but I personally wouldn't let that be like, the determining factor when opening a new bank account. And I don't really think I would change banks just to get a new bonus. To me, it just sounds like a lot of hassle and I, the, the bonus would have to be, I think a little bit bigger for me to, to want to close up my bank accounts that I've already vetted and that I'm already happy with.
Cassidy: Yeah, I could see like, if a bank that you were already considering is offering a bonus, and you're like, ooh, I'm already thinking about this bank. If I just go ahead and switch, I can also get this bonus. That might be kind of a telltale sign that it's, that it's good. I have this overall philosophy, mainly when it comes to buying things that like, if I wouldn't buy this thing full price, I probably shouldn't buy it just because it's on [00:40:00] sale.
And this is just a way for me to keep myself in check because I know that a lot of times, retail stores give discounts to create this FOMO of like, I need to act now to get 20% off or whatever.
And a lot of times, you know, it can trick you into buying things that you don't necessarily want but you think that you want in that moment because you're like, oh my gosh, this thing is on sale. And so I also carry that philosophy into like the bank bonus realm because I feel like sometimes you can be like, oh my gosh, I need to open up this bank account right now.
Like this offer expires in 30 days. Like if I don't do all this stuff, then I'm not going to get this extra $200 or $300. And I think it's good just to step back and be like, If this bank bonus wasn't being offered, is this an account I would want to open? And kind of let that lead you toward if it's a good or not good decision for you personally.
Emily: Mmhmm.
Cassidy: So kind of fits in that same logic.
Emily: Yeah. Yeah. I also have a similar philosophy with shopping on sale. I [00:41:00] really try not to buy anything that I wouldn't pay for full price. I think that's a really good rule of thumb. And it totally makes sense in this context too, I think.
Cassidy: Yeah. While we were talking, I thought of maybe a bonus factor to look for in addition to fees, interest rate, and customer service.
Emily: What is it?
Cassidy: And that is FDIC or NCUA insurance. So in other words, just make sure your bank is federally insured. If you're using a bank, it'll be insured through the FDIC and credit unions are insured through the NCUA, and that way if the bank fails, or closes, or goes under, or whatever, your deposits are safe up to the federally insured limits, so you don't lose your money.
Emily: Yeah, that's a good thing to know with online banks. I think people might have some hesitation about depositing their money with an online bank, but as long as they're FDIC insured, your money is safe.
Cassidy: Ya golden. That sounds good. Well that is a wrap on our questions. Do we want to end with a little call to action, or [00:42:00] maybe, do you want to talk about how much money you've earned in your high yield savings account this year?
Emily: Oh, sure. Yeah, so in one of my HYSA's, high yield savings accounts, I've earned just about 800 this year and, for comparison, if that was in a Chase account, which I believe currently, their interest rate is 0. 01%. I'd have earned a dollar. So… it's, yeah, wild how that compounds.
Cassidy: So what I hear you saying is that 30 wire transfer fee you had to pay was more than made up for by the $800 in interest you've earned so far this year.
Emily: It sure was.
Cassidy: Yeah.
Emily: And that's not counting the, you know, the money I would have lost to fees, potentially.
Cassidy: Yeah, yeah. It is so cool to think about, like, just doing something as simple as switching your savings account, which probably takes like 30 minutes and it's a thing that you do one time, can result in such a large [00:43:00] difference. Like you having $800 in earned interest versus $1.
Emily: Totally.
Cassidy: Yeah. I also looked up how much my high yield savings account has earned so far this year.
And it has earned over $2,000 in interest this year. Which is kind of a telltale sign that I have way too much money in my savings account at the moment. But, there was a period where, my husband and I were considering buying a house, so we've been saving up for a down payment. And so a large part of that is like, the down payment we would put on a house. We live in a high-cost-of-living area in the Pacific Northwest. So I don't know. And now we're kind of thinking, are we fine with renting? Long term, so now we don't know what, what to do.
What we'll do from here. Stay tuned.
Emily: Well, the good news is, even though you're not investing that money, you're still earning crazy interest on it. So.
Cassidy: I know! Over $2, 000, like, that is unbelievable. I looked up what that would be in a Chase account. If I had a Chase savings account, it would have been [00:44:00] $85 so far this year. So, and that's kind of a testament to how, like, big sums of money, like, it, yeah, the interest just goes up, goes in different directions real fast when you're looking at different rates.
Emily: Yeah. So I think, as you were saying, like, opening up a high yield savings account is potentially, like, one of the easiest things you can do to make a very big difference in your financial health, like, literally no matter what your balance is. It's one simple thing you can do, but, like, over the years, You know, earning $800, $2,000 a year, like, it's, it's gonna add up and you do it one time and then you don't think about it again.
Cassidy: Yeah. When did you open up your Discover high yield savings account?
Emily: I think it was in 2019, I was trying to remember. Yeah.
Cassidy: Yeah. I opened mine up in 2012, so it's like, yep, set aside 30 minutes to an hour to open it today, and you may not ever have to [00:45:00] open up another one again and you can keep reaping the rewards.
Emily: Yeah, so I think that brings us to our final closing thoughts and suggestions. Yeah, we, as you can tell, are big fans of high yield savings accounts and to encourage everyone listening if you don't already have a high yield savings account, set aside 30 minutes sometime this week. Do a little bit of research, but not too much, don't get bogged down by it. Choose a high yield savings account that offers competitive rates, doesn't charge fees, and has good customer service ratings, and just open an account.
Cassidy: Love it. Love it, love it.
Emily: And, if you have any additional questions regarding banking or any other topics we've touched on today. We'd love to answer them in a future episode so you can send them to our email at hello@thefinancegirlies.com.
Cassidy: Woo hoo!
