Internet savings as well as bank savings?

[Bman120]

Quick question for everyone. Do you all think it is a good idea to have a bank savings account as well as an internet savings account?

I have an ING account where I keep most of my money as well as an old bank savings account I havent closed yet with a little in it.

The ING acct has a much better interest rate but it takes 3 days or so to move money around. The bank savings can transfer money instantly though the interest rate isnt as good.

So is the faster access to money worth keeping it and getting reduced interest and having to spread my money out more?

I have yet to need to move money that fast but is it a good thing to have in case?

[PeakDream]

Since you don't have much saving in your bank's saving account, what does it matter? You still need to transfer money from your major saving account into that one anyway. I keep about one month worth of rent, food and fixed expense in my checking account that I can withdraw at any time, the rest is in my emigrantdirect which has a higher interest rate BTW.

[winneythepooh7]

I have an ING account as my primary savings that I don't touch. My fiance and I also recently opened a savings account at Commerce. I throw money in there every pay period towards our wedding expenses and whatever else may arise.

[old_school_soul]

There's no sense in "spreading your money around" in savings accounts, unless you're reaching the $100,000 FDIC insured limit. Even then, you throw money into mutual funds.. Savings have shitty returns.. I got 15% return last year on my funds, whereas my savings were only around 5%. Of course, fund returns aren't guaranteed.

[winneythepooh7]

Yeah, I also recently started an IRA. I don't put that much into it, because, really, I don't have that much to give, but it's still a good place to sock away money for savings that can't be touched.

[beeblebrox]

I have the medium in between both internet and bank-the Citibank e-Savings account money market. My money transfers are easy and I can watch my savings with my CD's next to it. It sounds like you're a little nervous about the internet savings account because you haven't closed the other one.

I'm thinking about getting an IRA and keeping the contributions low because I don't have much to put it in it either and I already have a 401k.

[redav]

What you are doing is fine. Liquidity (being able to access your money quickly) has a price, which is in the form of a lower interest rate.

I have a very similar set up as you. My ING account has the vast majority of my cash savings. I also have a money market account at the same institution as my checking account that has a few hundred in it. The reason I keep some cash in there and not close it is so that if I were to make a mistake with paying my bills (I forget something, realize I added wrong, etc) then I have instant access to funds to cover it. I don't keep much more than I need in my checking account because it pays no interest and it is too liquid (that makes it harder to save).

I am willing to sacrifice the difference in interest on a few hundred dollars (which isn't that much, really: $300 with a 3 points difference in rate = 75¢/mo) to gain that extra level of security.

Edit:
As a side note, I rarely transfer money out of my ING savings (a few times a year--pay for taxes, insurance, or a big-ticket item). I have calculated how much I need to cover all expenses, and I have that go into my checking acct from my paycheck. The excess goes directly into savings. With time, if I have more than I need in my checking, I skim off the excess into the savings. I do not like frequent put-it-in/take-it-out cycles--the tiny bit of interest I would earn from a few days isn't worth it.

[beeblebrox]

What you are doing is fine. Liquidity (being able to access your money quickly) has a price, which is in the form of a lower interest rate.

the citibank one is currently at 4.75% I'm with them in part to centralize my money, but they are just as competitive as the internet banks.

[redav]

the citibank one is currently at 4.75% I'm with them in part to centralize my money, but they are just as competitive as the internet banks.
Yes, linking checking directly to the high yield savings (at the same institution) completely eliminates the need for a small slush fund. I haven't pursued the Citibank accounts b/c there are just too many things tied to my current checking account, and I have no interest in having more than one. (And I would loose the 'friendly' neighborhood brick-and-mortar access.)

[SpaceMonkey]

There's no sense in "spreading your money around" in savings accounts, unless you're reaching the $100,000 FDIC insured limit. Even then, you throw money into mutual funds.. Savings have shitty returns.. I got 15% return last year on my funds, whereas my savings were only around 5%. Of course, fund returns aren't guaranteed.

I have two internet savings accounts (ING and Emigrant), because I like to maintain a physical separation between my "emergency" funds at ING, and my "long-term goal" savings at Emigrant. Keeping my emergency savings separate, for me, helps to prevent me from being tempted to touch it for some non-emergency.

[Bman120]

Interesting. Thanks everyone for the advice. Yea I dont have anywhere near 100,000.00 so I don't have to worry about the FDIC limit I just felt that some liquidity with money just in case was a good thing to have. And when you lay out the math, I guess its not that much of a difference in terms of the interest lost by keeing a few hundred in a bank savings rather than ING.

The citibank savings acct looks like a good deal but i've moved my checking acct before and its quite a hassle to do that. Would it be worth it to transfer everything to citibank to have instant transfers from their high interest acct?