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Automate, automate, automate! I’m sure you’ve heard this phrase before when it comes to everything from scheduling your student loan payments to paying the cable bill, but have you ever considered automating your savings? Or if you already automate your savings through your bank, have you ever considered trying an online savings account separate from your bank account?
I’m a big advocate of automation and an even bigger advocate of separated bank and savings accounts. I’m also a major fan of as much free money as I can get! Typically, online banks offer slightly higher interest rates than brick and mortar banks do because they don’t have as much overhead cost which means more interest/savings is passed on to the consumer! I automate my savings through Musashino Qapital* and can i buy Pregabalin in spain Capital One 360**. Every pay period, I have a certain amount of money taken out (you can choose between a certain percentage or a fixed amount to be deducted) and routed directly to my Qapital* (mobile app) and Capital One savings accounts**. The money goes directly into my savings before I even have a chance to see it come out of my paycheck.
Overall the concept is simple, the more automated your finances are the better. It’s the set it and forget it mentally, which allows your money to grow more efficiently over time. You won’t have to make a conscious effort each pay period to save, which is why most people don’t save to begin with, because the decision is made for you. You are making a conscious effort to pay yourself first, which is the key on the road to riches.
Here is a real life example of savings rates for the two banks I use:
Bank of America – Regular Savings Rate 0.01%**
vs
Capital One 360** – Online Savings Rate 0.75%**
(**real life APY aka Annual Percentage Yield rates as of 4/22/17)
So what does that mean for your wallet? It’s the difference between earning .05 cents (Bank of America) and $3.75 (Capital One 360**) over the course of a year on an initial deposit of $500. Now grant it, that may seem fairly small but in the long run its minimal hassle for even more free money and as we all know, every penny counts because it all adds up. Let’s take it a step further and say you deposit $5,000 over the course of the year, it would be a difference in receiving .50 cents (Bank of America) and $37.50 (Capital One 360**), now do you see why it matters? The more free money the better!
Here are a few more reasons why you should consider an online savings account –
1.) Accessibility- Whether you’re trying to save for a car or for a wedding, whatever your savings goal is, the money in your savings account online will be a little harder to access. When I say harder to access I mean, basically it’s going to take a few days to transfer and touch your cash. Instead of just transferring the money into your linked checking account (if you keep your savings and checking accounts in the same place), you’ll have to wait a few days to have the money transferred from your online savings account to your actual bank account. It usually takes 2-3 business days, so you’ll need to be prepared to wait a little to access your cash. Generally, we are our worst enemies when it comes to managing money. By making it a little more challenging to access your money, you’re actually setting up a way to stay on track and keep your hand out of the cookie jar because lets face it, we all prefer instant and easy. Who enjoys waiting a few days for their money? Qapital* makes it even easier to transfer money which takes even less time to hit you account (1-2 business days).
2.) Better interest rate – Generally, you will find that online banks offer slightly better interest rates than brick and mortar shops. Since they don’t have to worry about overhead cost or maintaining a building etc., this allows them to pass the savings onto the customers.
3.) Automation – You can automate your savings online and even create different savings goals and buckets. You can have the money come straight out of your paycheck, like I do, or you can set it up via your online account to have money transferred from your checking account on a regular basis. The set it and forget it mentality can really help you achieve your long term goals without you having to lift a finger or put in any extra effort to make it work. Out of sight out of mind, just watch the cash pile up!
There are plenty of online banks that offer great interest rates for your money. You just have to invest a little time, literally 15-20 minutes to check out your options and figure out what bank will be the best option for you. Some accounts require a minimum deposit while others don’t require a minimum at all. However, generally, your going to get a competitive interest rate by going with an online shop rather than a brick and mortar place.
So you ready to start saving? Or you want to set up an online account to give it a test drive? Try Qapital*, its a quick and easy to use mobile app that you can access on your smartphone Qapital*. Qapital* is a mobile app that allows you to establish savings goals by setting up rules that trigger deposits into your Qapital* account from your checking account.
Disclaimer – Referral Links in post
*(**)Plus, if you sign up, I get a sweet referral bonus from Qapital* and Capital One 360** at no charge to you.
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Richard Buse says
I use Ally and love it!